Citation Codes

Equivalent Citations

citation codes

Case Number

First appeal from order No. 9 of 1949.

Advocates

Tek Chand,
S.M Sikri, Advocate-General,

Judges

Khosla
Harnam Singh JJ.

Acts

provisions of Sections 177(1) and 150 of tne Government of India Act, 1935, hereinafter referred to as the Act,
15-8-1947. 22. Section 6(1), Indian Independence Act, 1947, hereinafter referred to as the Independence Act,
Section 81, Commonwealth of Australia Constitution Act
Section 2 of the Independence Act the Defence Order
Sub-section (1) of Section 9 of the Independence Act,
Section 20 End Section 8(2), Arbitration Act
Section 11(1) of the Independence Act
ARTICLE 293 CONSTITUTION OF INDIA
Sub-section (1) of Section 11
SECTION 20 ARBITRATION ACT

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Smart Summary

Concise Analytical Summary of the Opinion

Factual and Procedural Background

This appeal challenges an order of the Subordinate Judge, Ferozepore, which dismissed an application made under Section 20 of the Arbitration Act. The matter was referred to a Division Bench because it involved an important point of law with implications for multiple cases.

The underlying facts: in 1945 a contract was entered into for the supply of fodder to the Military Dairy Farm at Lahore. The contract contained an arbitration clause. Pursuant to that clause, on 13-3-1948 (as stated in the opinion) the firm Chaman Lal Loona and Company filed an application under Section 20 and Section 8(2) of the Arbitration Act in the Court of the Subordinate Judge, Ferozepore.

The Dominion of India (impleaded as respondent) contended that the contract was exclusively for the purposes of the Dominion of Pakistan under Clause/Article 8 of the Indian Independence (Rights, Property and Liabilities) Order, 1947, and therefore India could not be held liable and the Ferozepore courts lacked jurisdiction. The trial Judge held that his court had jurisdiction but concluded that liability for payment under the contract lay exclusively with the Dominion of Pakistan, and dismissed the petition. The present appeal challenges that dismissal.

The principal legal question identified by the Court is whether the contract was "for the purposes which as from that day (15-8-1947) are exclusively purposes of the Dominion of Pakistan."

Legal Issues Presented

Whether the 1945 contract for supply of fodder to the Military Dairy Farm at Lahore was a contract "for purposes which as from 15-8-1947 are exclusively purposes of the Dominion of Pakistan" within the meaning of Article 8(1) of the Indian Independence (Rights, Property and Liabilities) Order, 1947.
Whether the fodder to be supplied constituted "Military Stores" and, if so, whether military stores being under the Joint Defence Council's control prevented the contract from being exclusively a Pakistan purpose.
Whether Article 8(1) of the Order applies only to executory contracts and not to executed contracts (i.e., whether the clause is inapplicable where performance is complete).
The question of jurisdiction: whether the plaintiff is a displaced person (permitting suit where he resides) or, if not, whether jurisdiction lies where the cause of action arose in whole or in part.
In the separate execution/enforcement context (E.P.A. No. 259 of 1950), whether a non-contractual (tort) claim arising wholly within territories which as from 15-8-1947 are Pakistan's territories is a liability of Pakistan under the relevant clause of the Order (referred to in the opinion as Clause 10 / Clause 110).

Arguments of the Parties

Arguments advanced for the Dominion of India (as represented by the learned Advocate-General)

The contract must be deemed to be exclusively for the purposes of Pakistan because the Military Farm at Lahore is situated within Pakistan, and therefore the geographical location where the consignment was to be made determines the "purpose" under Article 8(1).
Implicitly, if the purpose after 15-8-1947 falls within the territory of Pakistan, liability should be allocated to Pakistan.

Arguments advanced for the contractor / opposite party

The fodder was in the nature of Military Stores and therefore covered by the Joint Defence Council Order, 1947, which kept military stores "joint" and under exclusive control of the Joint Defence Council even after 15-8-1947; accordingly the contract could not be said to be exclusively for the purposes of Pakistan.
A distinction was drawn between Military Stores (which remained joint under the Defence Order) and other stores: only Military Stores remained joint after 15-8-1947; stores and contracts relating to other departments would not be covered by the Joint Defence Council Order.
An argument was also raised that Clause 8(1) applies only to executory contracts and not to contracts already executed; this contention was advanced but rejected by the Court.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Union of India v. Loke Nath, AIR 1952 Cal 140	Held (in that case) that carriage of goods between two stations now in Pakistan was not a contract exclusively for Pakistan because the carriage was to occur before Pakistan existed.	The Court stated with respect that this decision does not lay down the correct law for present purposes: the present opinion treats the "purpose" as to be determined as at 15-8-1947, irrespective of when performance was to occur. The opinion therefore distinguishes and rejects the approach of Loke Nath for present circumstances.
Province of West Bengal v. Midnapore Zemindary Co. Ltd., AIR 1950 Cal 159	Applied as an example where the lease of a house used as a hospital was treated as entirely for West Bengal because the house was situated in West Bengal.	Used by the Court to illustrate the territorial approach: where there has been a complete transfer of certain departments or assets and liabilities to a Dominion after partition, the purpose will be treated as that of the Dominion in whose territory the subject-matter lies.
Attorney-General (Victoria) v. Commonwealth of Australia, 71 Com-W LR 237	Interpretation of the words "purposes of the Commonwealth" — that "purposes" include purposes in respect of which the Parliament has power to make laws and encompass power to authorize expenditure.	The Court invoked Latham, C.J.'s formulation to support the view that "purposes" include functions and expenditures connected with subject-matters for which a Dominion may make laws; this supported assessing whether entry I, List I matters became exclusively Pakistan's purposes.
A.K. Gopalan v. State of Madras, (reported in the opinion as AIR 1950 SO 27 (D))	Authority for the proposition that reports or debates (here, an Expert Committee report) may be used to resolve ambiguity but do not control the meaning of statutory text.	The Court relied on this authority to hold that the Report of Expert Committee No. IV cannot control the meaning of Article 8(1) and may only be read where ambiguity arises; the Court found no such ambiguity here.

Court's Reasoning and Analysis

The Court set out a legal framework founded on the text of Article 8(1) of the Indian Independence (Rights, Property and Liabilities) Order, 1947 and on the Defence Order made under powers conferred by the Independence Act. The analysis proceeded in discrete steps:

Interpretation of Article 8(1): the Court held that to determine whether a contract falls within Article 8(1)(a), one must examine the nature of the contract's purpose as from 15-8-1947. The date of performance of the contract is immaterial; if any liability subsists on that date the contract is a live chose in action and its purpose is to be determined with reference to the position on 15-8-1947.
Characterisation of the goods: for purposes of the decision the Court proceeded on the working assumption that the fodder constituted Military Stores. The Court expressly noted that in other cases this factual question will require enquiry; if on enquiry goods are found to be Military Stores the present decision will apply to those cases.
Effect of the Defence Order and control of military stores: the Joint Defence Council Order (Defence Order) placed military stores under the exclusive control of the Joint Defence Council, with power to allocate, transfer and move stores between the Dominions and to incur expenditure in carrying out the Order's purposes. Because the Joint Defence Council retained exclusive control over such stores as at 15-8-1947, fodder lying at the Lahore Military Farm was not the exclusive property of the Dominion of Pakistan on that date.
Consequence for Article 8(1) application: since military stores were joint and transferable by the Joint Defence Council, the contract for supplying fodder to the Lahore farm could not be treated as a contract exclusively for the purposes of the Dominion of Pakistan when viewed on 15-8-1947. The trial Judge's finding to the contrary was thus set aside.
Executed vs executory contract argument: the Court rejected the contention that Article 8(1) applies only to executory contracts. It reasoned from the wording of Article 8 that if any liability under a contract remains undischarged on 15-8-1947 the contract is still alive for allocation of liability.
Jurisdictional analysis: jurisdiction depends on whether the plaintiff is a displaced person (in which case he may sue where he resides). Otherwise, jurisdiction is where the cause of action in whole or in part arose. Applying those principles, the Court found that the Ferozepore courts had jurisdiction in the main matter because the security deposit claimed was to be paid at Muktsar; likewise the Jullundur courts had jurisdiction in the cited revisions where goods were to be delivered F.O.R. Jullundur Cantonment or Jullundur City, as shown by acceptance forms.
Non-contractual liability (E.P.A. matter): the Court analysed a separate case (accident at Rawalpindi) and concluded that because the claim was non-contractual, it falls under the clause of the Order dealing with causes of action arising wholly within territories which as from 15-8-1947 are Pakistan's territories (referred to in the opinion as Clause 10 / Clause 110). Thus liability for that tort was held to be that of the Dominion of Pakistan and execution in India was to be dismissed.
Use of precedents and reports: the Court rejected an argument based on an Expert Committee report that rights and obligations should be allocated according to where stores were located on 15-8-1947, holding that the report cannot control the meaning of Article 8(1) and may be used only to resolve ambiguity; finding no ambiguity, the Court did not accept the Expert Committee-based argument.

Holding and Implications

CORE RULING: The Court set aside the trial Judge's conclusion that the contract for the supply of fodder to the Lahore Military Farm was exclusively for the purposes of the Dominion of Pakistan. The appellate court allowed the petition(s) and revisions identified in the opinion (including F.A.O. No. 9 and Civil Revisions Nos. 83, 64 and 70 of 1949, and other petitions specifically mentioned) to the extent stated in the judgment.

Immediate implications for the parties and related proceedings:

The finding that the contract was not exclusively a Pakistan purpose means that liability under the contract is not automatically cast upon the Dominion of Pakistan simply because the delivery place was within Pakistan; where goods are military stores under the Defence Order the stores remained joint and the contract cannot be treated as exclusively Pakistan's purpose on 15-8-1947.
Trial courts are directed to proceed to determine factual questions (for example, whether particular goods are in fact Military Stores) and to adjudicate the matters according to law in light of the principles stated.
On jurisdiction, courts in Ferozepore and Jullundur were held competent to entertain the respective suits because of the contractual terms as to payment or delivery points; if a plaintiff is a displaced person he may sue where he resides, otherwise suit must be where cause of action arose in part or whole.
In the non-contractual (tort) execution matter, the appeal in favour of the Union of India was allowed: the liability for a wrong occurring wholly in territory that became Pakistan is that of Pakistan, so execution in India was dismissed.

Ancillary consequences: The judgment explains and applies Article 8(1) of the Indian Independence Order and the Defence Order; it was expressly treated as bearing on a number of other cases and factual situations. The Court made no order as to costs in the matters it disposed of.

Note: This summary is strictly confined to the matters, arguments, precedents and reasoning expressly contained in the provided opinion text. No facts or holdings have been added beyond what appears in that text.

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Chaman Lal Loona And Co., . v. Dominion Of India, New Delhi, .

1. This appeal is directed against an order of a Subordinate Judge, Ferozepore, dismissing an application under Section 20, Arbitration Act. The matter has been referred to a Division Bench by Kapur, J. on the ground that it involves a law point of considerable importance which is likely to affect a number of other cases.

2. The facts of this case are briefly as follows. Fodder was required for the Military Dairy Farm at Lahore and for the supply of this fodder a contract was entered into in 1945. The contract contained an arbitration clause and in pursuance of this clause an application under Section 20 End Section 8(2), Arbitration Act was filed on 13-3-1918, by the firm Chaman Lal Loona and Company in the Court of a Subordinate Judge, Ferozepore. The Dominion of India who was the respondent impleaded took up the objection that the contract was exclusively for the purposes of Pakistan within the meaning of Clause 8, Indian Independence (Rights, Property and Liabilities) Order 1947, and that, therefore, the Dominion of India could not be held liable under the contract. As a corollary to this, it was contended that the Courts at Ferozepore had no jurisdiction to entertain the matter. The trial Judge held that his Court had jurisdiction to hear the application but that the liability for payment under the contract was exclusively that of the Dominion of Pakistan. On this ground he dismissed the petition and an appeal against the order of dismissal was filed in this Court. The sole question for determination is whether the contract was

"for the purposes which as from that day (15-8-1347) are exclusively purposes of the Dominion of Pakistan."

3. The argument of the learned Advocate General is that this contract must be deemed to be a contract exclusively for the purpose of Pakistan because the Military Farm, Lanore, is situated within the territory of the Dominion of Pakistan and the geographical location of the place where the consignment was to be made determines the purpose within the meaning of Article 5. On the other hand it is argued that fodder intended for the Military Farm was in the na-ture of Military stores and as such it was covered by the Joint Defence Council Order, 1947, whereby all Military Stores remained joint even after 15-3-1917. Therefore it could not be said that this contract was exclusively for the purposes of the Dominion of Pakistan. Distinction was sought to be drawn between Military Stores and other stores as only Military Stores remained joint after 15-6-1947. Stores and contracts relating to other department would not be covered by the Joint Defence Council Order, 1947.

4. In the discussion which follows it will be assumed that fodder constitutes Military stores. I wish to make this clear at the outset because our decision is likely to affect a number of other eases which were argued before us at the same time and in which tile question might arise whether the goods which were to be supplied were or were not Military stores. If any doubt arises on this question of fact the matter will have to be determined by a proper enquiry. But if it is found upon such enquiry that the goods to be supplied or supplied were covered by the term 'Military Stores' then the decision in this case will cover the case of such goods.

5. Article 8, Indian Independence (Rights, Property and Liabilities) Order is in the following terms :

"8(1) Any contract made on behalf of the Governor-General in Council before the appointed day shall, as from that day,

(a) if the contract is for purposes which as from that day are exclusively purposes of the Dominion of Pakistan, be deemed to have been made on behalf of the Dominion of Pakistan instead of the Governor-General in Council; and

(b) in any other case, be deemed to have been made on behalf of the Dominion of India instead of the Governor-General in Council;

and all rights and liabilities which have accrued or may accrue under any such contract shall, to the extent to which they would have been rights or liabilities of the Governor-General in Council be rights or liabilities of the Dominion of Pakistan or the Dominion of India, as the case may be."

* * * The meaning of Article 8(1) appears to me to be that where there is a contract for a certain purpose we must examine the nature of that purpose after 15-8-1947, and if on that day the purpose Is exclusively the purpose of the Dominion of Pakistan then the liability under that contract will be the liability of the Dominion of Pakistan. The date on which the contract is to be performed is, in my view, immaterial. If any liability under the contract subsists the contract is alive as a chose in action and, therefore, even if the contract was performed before 15-8-1947, the liability under it remains undischarged. In apportioning liability regard must be had to the purpose of the contract and this purpose will be the purpose after 15-8-1947.

Our attention was drawn to -- 'Union of India v. Loke Nath', AIR 1952 Cal 140 (A); in which it was held that the contract for the carriage of goods between two stations which are now in Pakistan was not a contract exclusively for the purpose of the Dominion of Pakistan because the goods were to be carried in March, 1947, before the Dominion of Pakistan was ever thought of. With great respect this decision does not appear to me to lay down correct law. The purpose in that case was the carriage of goods on the railway and that purpose after 15-8-1947, would be exclusively a purpose of Pakistan. Therefore where there has been a complete transfer of a certain department, or of assets and liabilities of a eer-tain type after the partition, the purpose which was originally the purpose of India will be treated. as the purpose of Pakistan. For instance the sup-ply of goods to a hospital or educational institution, now situated in Pakistan would be deemed to be the exclusive purpose of the Dominion of Pakistan within the meaning of Article 8(1). Reference may be made to the -- 'Province of West Bengal v. Midnapore Zemindary Co. Ltd.1', AIR 1950 Cal 159 (B), in which the lease of a house which was used as a hospital was considered to be entirely for purposes of West Bengal because the house was situated in West Bengal.

6. In the present case the Lahore Military Farm is situated at Lahore and whether the fodder was supplied in 1945 or after 15-8-1947, the purpose will be deemed to be a purpose of the Dominion of Pakistan on account of the territorial situation of Lahore. But in the present case the fodder was to be supplied to a Military Farm and the fodder, therefore, constituted Military Stores. Military stores were kept joint and under the exclusive control of the joint Defence Council who had the power of allocating these stores among the two Dominions and for transferring them from one place to another. Therefore fodder lying in the Military Farm, Lahore, was not on 15-8-1947, the exclusive property of the Dominion of Pakistan but was under the exclusive control of the Joint Defence Council. This fodder could be transferred to a farm in India and thus could become the property of the Dominion of India. In the circumstances it cannot be said that the contract for supply of fodder to the Military Farm, Lahore, was a contract exclusively for the purpose of the Dominion of Pakistan if the contract were viewed on 15-8-1947, and that being so, it must be held that the contract was not a contract exclusively for the purposes of the Dominion of Pakistan. The decision of the learned trial Judge on this point must, therefore, be set aside.

7. An argument urged at the Bar was that Clause 8 (i) applies to executory contracts and not executed contracts. This contention, however, is without any force as even a cursory examination of the phraseology of Clause 8 will show that if any liability under a contract remains imdischarged the question of allocating this liability arises and it necessarily follows that the contract is alive and enforceable. If a contract is completely executed no dispute under it can arise. For determining which of the two Dominions must undertake the liability under the contract the contract must be deemed to have been made on 15-8-1947. The purpose of the contract must then be determined and if that purpose is the purpose of Pakistan then the liability will be that of the Dominion of Pakistan, otherwise the liability will be of the Dominion of India. In the present case the fodder must be considered to have been joint on 15-8-1947, and, therefore, the purpose was not exclusively! the purpose of the Dominion of Pakistan.

8. With regard to the question of Jurisdiction the decision must depend on whether the plaintiff is a displaced person. If he is, he is entitled to file a suit in a Court within whose Jurisdiction he resides, otherwise the suit must be filed at a place where the cause of action arose in part or in whole. In the present case the security deposit which the appellant claims was to be paid to him at Muktsar and so the Courts of Ferozepore could entertain the suit.

9. Similarly in Civil Revision No. 344 of 1949 the goods were to be delivered F. O. R. Jullundur Cantonment and so it is clear that the Courts at Jullundur have jurisdiction to hear the case. This petition is allowed.

10. In Civil Revisions Nos. 63, 64 and 70 of 1949 there is a dispute as to whether the goods were military goods or not. The goods in these cases were to be delivered F. O. R. Jullundur City as is shown by the acceptance form and so the Courts of Jullundur have jurisdiction to hear these cases. For the reasons given above I would allow F. A. O. No. 9 and Civil Revisions Nos. 83, 64 and 70 of 1949. I hold that in all these cases the purpose o£ the contract was not exclusively a purpose of the Dominion of Pakistan unless it can be shown that the goods which were to be supplied were not in the nature of Military stores. The trial Courts concerned will proceed to adjudicate upon the matters and decide them according to law. In the circumstances I make no order as to costs.

11. I may in this order deal with E. P. A. No. 259 of 1950 also as the points Involved are somewhat similar. In this case a suit was brought for recovery of damages on account of an accident as the result of which a Railway Guard serving in the North Western Railway, Rawalpindi, was billed. The suit was decreed and the decree-holder Shakuntala Devi sought execution in the Court of the Senior Sub Judge, Delhi. Objection was taken that the liability under the decree was not the liability of the Dominion of India but that of the Dominion of Pakistan. The learned Senior Sub-Judge, however, held that the East Punjab Railway being the successor of the North Western Railway was liable under the decree. Against this decision the Union of India has filed an appeal to this Court.

12. The claim was based on a non-contractual obligation and, therefore, the case falls under Clause 110, Indian Independence (Rights, Property and I Liabilities) Order, 1947. This clause provides that where the cause of action arose wholly within the territories which, as from 15-8-1947, are the territories of the Dominion of Pakistan, the liability shall be the liability of the Pakistan Dominion. The accident took place at Rawalpindi and the claim is not besed on a contract. Therefore the liability for damages is that of the Dominion of Pakistan and the decree-holder's application is liable to be dismissed. The learned Senior Sub Judge of Delhi erred in holding that the East Punjab Railway was liable. Mr. Shamair Chand contended that the case fell under Article 9, but it is clear that Article 9 relates to liabilities under the contracts referred to in Article 8 for it speaks: "All liabilities in respect of such loans, guarantees and other financial obligations." The respondents' claim arose out of an actionable wrong other than the breach of contract and it clearly fell under Clause 10. This appeal must, therefore, be allowed and allowing it I would dismiss the respondents' application for execution, I would however make no order as to costs.

Harnam Singh, J.

13. In concurring in the foregoing judgment, I state reasons for my opinion on the main point arising under Article 8(1), Indian Independence (Rights, Property and Liabilities) Order, 1947, hereinafter referred to as the order.

14. Article 8(1) of the Order provides: (Article 8(1) is quoted as given in para (5) above).

15. In these proceedings it is not disputed that the contracts in suit were made on behalf of the Governor-General in Council before the 15th August, 1947. The question that, therefore, arises for decision is whether the contracts in suit from 15th August, 1947, are exclusively for the purposes ot the Dominion of Pakistan.

16. In order to. appreciate the question that arises for decision the provisions of Sections 177(1) and 150 of tne Government of India Act, 1935, hereinafter referred to as the Act, may be borne in mind.

From a perusal of the provisions of Section 150 of the Act it is plain that the purposes of the Dominions of India and Pakistan plainly 'include' purposes in respect of which the Dominions of India and Pakistan, as the case may be, may make laws with effect from 15-8-1947. In this connection Article 293, Constitution of India may also be seen.

19. In the opinion that I have expressed in the preceding paragraph, I receive support from what was said by Latham, C. J. in -- 'Attorney-General Victoria v. Commonwealth of Australia', 71 Com-W LR 237 (C). In that case Latham, C. J. in construing the words "purposes of the Commonwealth" occurring in Section 81, Commonwealth of Australia Constitution Act said: "I approach the consideration of this question with the 'prima facie' opinion that the words 'purposes of the Commonwealth' (which plainly 'include' purposes 'in respect of which the Parliament has power to make Laws') sre not identical in meaning with the latter words. I have already stated my opinion that each such power includes a power to authorise the expenditure of money."

20. Admittedly, the contracts in question were made under Section 175 of the Act read with entry I, Federal Legislative List, in so far as that entry relates to His Majesty's armed forces. As was said by Latham, C. J. to -- '71 Com-W LR 237 (C)', each power to make laws with respect to a particular subject-matter includes a power to make a law providing for the expenditure of money in relation to that subject-matter.

21. In these circumstances, the question, for decision whether the matters covered by entry I, List I of tile Act became exclusively the purposes of Pakistan with effect from 15-8-1947.

22. Section 6(1), Indian Independence Act, 1947, hereinafter referred to as the Independence Act, provides that the Legislature of each of the new Dominions shall have full power to make laws lor chat Dominion, including laws having extra territorial operations. That being so, the Legislature of the Dominion of Pakistan had full power to make laws for that Dominion as from the 15-8-1947, on matters covered by entry I, List If Schedule 7 of the Act.

23. Section 9(1) of the Independence Act authorized the Governor-General of India to make such provisions ss appeared to him to be necessary or expedient for making agreements to be entered into and other acts done, on behalf of either of the new Dominions before 15-8-1847, and section 11 of the independence act authorized the Governor-General of India to make provisions for the division of the Indian armed forces of His Majesty between the new Dominions and for the command and governance of those forces 'until the division was completed'.

24. In exercise of the powers conferred by Sub-section (1) of Section 9 of the Independence Act, and in pursuance of Sub-section (1) of Section 11 thereof, the Governor-General made the Joint Defence Council Order, 1947, on 11-8-1947, hereinafter referred to as the Defence Order. The Defence Order was to remain in force till the 1-4-1948, but it was provided in that Order itself that Governor-General of India and Governor-General of Pakistan acting jointly may direct that the Order shall remain in force for such further period as may be specified in the direction.

25. Article 8 of the Defence Order provides 'inter alia' that the Joint Defence Council shall be in exclusive control of "(a) the division of the Indian forces between the Dominions and their reconstitution as two separate Dominion forces;

(b) the allocation, transfer and movement of officers and men belonging to the Indian forces for the purposes of such reconstitution;

(c) the allocation, transfer and movement for the purposes of such reconstitution of plant, machinery, equipment and stores held by the Governor-General in council immediately before 15-8-1947 for the purposes of the Indian forces;

26. Article 9 of the Defence Order provides that the executive authority of each of the two Dominions shall be so exercised as to give full effect to any orders or directions that may be nude or given by the Joint Defence Council in exercise of the powers conferred on them by the Order and Article 15 of that Order then provides that all expenses incurred by or under authority derived from the Joint Defence Council or the Supreme Commander for carrying into effect the 'purposes' of that Order shall be borne by the Dominions of India and Pakistan in such proportion as may be determined by the Joint Defence Council.

27. Clearly, the Joint Defence Council was put In exclusive control of the division of the Indian forces between the Dominions and their reconstitution as two separate Dominion forces end the allocation, transfer and movement of officers and men belonging to the Indian forces for the purposes of such reconstitution. The Joint Defence Council was empowered to incur expenditure for carrying into effect the 'purposes' of the Order as distinguished from the purposes of the Act. If so, the contracts in question were not for purposes which as from 15-8-1947, are exclusively purposes of the Dominion of Pakistan. Article 3(2) of the Order provides that nothing in that Order shall affect the powers of control over military plant, machinery, equipment and stores conferred on the Joint Defence Council by the Defence Order.

28. Again, the stores in question were held by the Governor-General in Council immediately before 15-8-1947, for the purposes of the Indian forces and on the partition of the country under Section 2 of the Independence Act the Defence Order gave exclusive control over those stores to the Joint Defence Council. As stated above, Section 11(1) of the Independence Act authorized the Governor-General to make provisions for the division of the Indian armed forces of His Majesty between the new Dominions and for the command and governance of those forces until the division was completed. In these circumstances it cannot be maintained that the purposes for which the contracts were made on behalf of the Governor-General in Council immediately before 15-8-1947, became the exclusive purposes of the Dominion of Pakistan with effect from that date.

29. Basing himself on the report of the Expert Committee No. IV set up by the Government of India. (Partition Office) memorandum No. 14/P. O/1054, dated 18-6-1947, counsel appearing for the Union of India urges that rights and obligations under contracts made up to 15-8-1947, shall be deemed to have been made by the Dominion in whose territories the stores are on 15-8-1947. In my judgment the Report of the Expert Committee may be read not to control the meaning of Article 8, but may be seen in case of ambiguity. For authority on this point -- 'A. A.K Gopalan v. State Of Madras.', AIR 1950 SO 27 (D) may be seen. In that case Kania, C. J. said at p. 38 :

"Our attention was drawn to the debates and report of the drafting committee of the Constituent Assembly in respect of the wording of this clause. The report may be read nob to control the meaning of the Article, but may be seen in case of ambiguity."

30. Clearly, the argument raised on the basis of the report of the Expert Committee No. IV cannot be accepted. No ambiguity arises from reading Article 8(1) of the Order with Article 8 of the Defence Order.

31. In arguments it was said that Article 8(1) of the Order does, not apply to executed contracts. For the reasons given by Khosla, J., I think that there is no substance in the argument raised.

32. For the foregoing reasons, I think, that the defendant has failed to establish that the contracts in question were exclusively for the purposes of the Dominion of Pakistan.

Chaman Lal Loona And Co., . v. Dominion Of India, New Delhi, .

Concise Analytical Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Arguments advanced for the Dominion of India (as represented by the learned Advocate-General)

Arguments advanced for the contractor / opposite party

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Chaman Lal Loona And Co., . v. Dominion Of India, New Delhi, .

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