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Structured Summary of the Opinion (Mehar Singh, J.)

Factual and Procedural Background

This judgment disposes of three first appeals against Tribunal orders (Nos. 40 D/64, 97 D/54 and 101 D/54). In each underlying proceeding an applicant (a displaced creditor) filed an application under section 13 of the Displaced Persons (Debts Adjustment) Act, 1951 seeking an amount stated in the application against the Union of India as respondent.

The Union of India raised a preliminary objection in each application that it is not a "person" within the scope of sections 2(6)(c) and 13 of the Act who either ordinarily or actually and voluntarily resides, or carries on business or personally works for gain in the territory of India, and therefore the application under section 13 was incompetent. The Tribunal upheld that objection and dismissed the three applications by separate orders (dates referenced in the opinion). Each applicant appealed from the respective dismissal. A learned Single Judge referred the question to a larger Bench, resulting in this judgment.

Legal Issues Presented

  1. Whether the Union of India can be described as a "displaced person" or as a "person" to whom a debt under section 2(6)(c) of the Displaced Persons (Debts Adjustment) Act, 1951 can be owed.
  2. Whether, for the purposes of section 2(6)(c) of the Act, the Union of India "ordinarily resides in the territories to which this Act extends."
  3. Whether, for the purposes of section 13 of the Act, the Union of India "actually or voluntarily resides, or carries on business or personally works for gain" within the local limits of a Tribunal's jurisdiction such that a displaced creditor may make an application against it under section 13.

Arguments of the Parties

Appellants' Arguments

  • The Union of India is a corporation of the total inhabitants and subjects of India and is a "person" within the meaning of section 3(42) of the General Clauses Act, 1897 (which defines "person" to include companies and bodies of individuals).
  • Because the Union of India is a juristic or artificial person, it must "reside" somewhere — either at its main seat or effectively "in every nook and corner of the country" — and therefore falls within the scope of sections 2(6)(c) and 13 of the Displaced Persons (Debts Adjustment) Act.
  • Reliance was placed on authorities such as Doss v. Secretary of State for India in Council and English authorities (including a head-note about the King as a corporation) and on Article 390 of the Constitution (that the Government of India may sue or be sued by the name of the Union of India) to support the proposition that the State can be sued and thus is "in" India.
  • Other case law and authorities were invoked (specific cases are discussed in the opinion) to support the contention that the Union of India should be treated as within territorial jurisdiction for relevant purposes.

Respondent's Arguments

  • The Union of India cannot, by any construction of the Act, be described as a "displaced person".
  • For the purposes of sections 2(6)(c) and 13 of the Act, the Union of India is not a "person" who either ordinarily resides in the territory to which the Act extends or actually/voluntarily resides, or carries on business or personally works for gain within the local limits of the Tribunal's jurisdiction; therefore the applications under section 13 are not competent.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Doya Narain Tewary v. The Secretary of State for India in Council, 1886 I.L.R 14 Cal. 256 The words "dwells or carries on business or personally works for gain" do not apply to the Secretary of State for India in Council (i.e., to Government). The Court relied on this decision as an early authority holding that the test of residence/carrying on business cannot be applied to government; it forms part of the chain of authority supporting dismissal of the appeals.
Rodricks v. Secretary of State for India, 1912 I.L.R 40 Cal. 308 Confirmed that this Court has no jurisdiction to entertain a suit against the Secretary of State for India in Council on the sole ground that the Secretary "dwelt or carried on business" within local limits when the cause of action arose outside ordinary original jurisdiction. The opinion notes approval of the earlier Division Bench decision and cites its headnote to support the conclusion that the residence test cannot be applied to the government.
Dominion of India v. R.C.K.C. Nath & Co., A.I.R. 1950 Cal. 207 Followed the principle that government does not fall within the residence/carrying-on-business test for jurisdictional purposes. Listed among subsequent decisions that followed the earlier Calcutta decisions; used to show consistent judicial approach.
C. Govindara Julu Naidu v. Secretary of State for India in Council, I.L.R. 50 Mad. 449 Applied the same principle in the Madras High Court that the residence/carrying-on-business test does not apply to the Secretary of State (Government). Identified as one of the authorities that adopted the view that government is not to be treated as "residing" for jurisdictional tests.
R.J. Wyllie & Co. v. Secretary of State, A.I.R. 1930 Lah. 818 Another High Court decision supporting the non-application of the residence/carrying-on-business test to government. Referenced among the decisions following the earlier line of authority.
Nagi Brothers v. Dominion of India, A.I.R. 1951 Punj. 92 Followed the principle that government is not within the ordinary test of residence/carrying-on-business for jurisdictional purposes. Included in the list of High Court decisions endorsing the view relevant to the appeals.
Shiv Parshad v. Punjab State, 1957 59 P.L.R. 35 Applied similar principle concerning government and jurisdictional residence. Listed as another authority consistent with the view adopted by the Court.
Luchhmandas H. (Lachhmandas H.) Advani v. Union of India, A.I.R. 1956 Bom. 43 Considered section 2(6)(c) and section 13 of the Displaced Persons (Debts Adjustment) Act and held that the Union of India could not be predicated to "ordinarily reside" in the territories to which the Act extends; application under section 13 was not maintainable. The Court treated this Bombay High Court decision (a direct s.13 case) as closely on point and supportive; it is relied upon to uphold the Tribunal's dismissals in the present appeals.
Doss v. Secretary of State for India in Council, 1875 XIX Equity Cases 509 Observation noted that the Secretary of State is in India and can be sued there (based on statutory provision treating Secretary as a body corporate for suing/being sued). The opinion explains why this authority does not assist appellants: the observation was grounded in a statutory fiction (s.65 of Act 21 & 22 Vict. 106) and does not establish residence for jurisdictional tests under the Act.
Bata Shoe Co., Ltd. v. Union of India, A.I.R. 1954 Bom. 129 Held that the expression "residing" or "working for gain" or "carrying on business" cannot apply to the Union of India; the Union is ubiquitous and the test of residence cannot be applied to it. The opinion cites a Division Bench decision of the Supreme Court (after review) aligning with this view; the Court relies on this analysis (including Chagla, C.J.'s observations) to conclude appellants' contention fails.
Steel & General Mills Co. Ltd. v. General Accident Fire & Life Assurance Corporation Ltd. (Alluded, judge Soni) Held that a company has residence where its administrative office is situated and is a "displaced person" under section 3 of the Displaced Persons (Institution of Suits) Act, 1948 (as applied to companies). The Court found this authority inapplicable: the position of a government is not the same as that of a private corporation, and the case is irrelevant to the present appeals.
Maqbulunissa v. Union of India, A.I.R. 1953 All. 477 Allahabad High Court dictum that the Union of India can be said to be within the territorial jurisdiction of that Court because it has authority throughout the country. The opinion notes subsequent Supreme Court decisions show this dictum to be incorrect; the Court therefore does not rely on it.

Court's Reasoning and Analysis

The Court proceeded by focusing on the language of the Displaced Persons (Debts Adjustment) Act. It identified the operative definitions and provisions:

  • Section 2(6) defines "debt" and, in clause (c), contemplates a debt "due to a displaced person from any other person ... ordinarily residing in the territories to which this Act extends." The question therefore was whether the Union of India ordinarily resides in those territories for purposes of s.2(6)(c).
  • Section 13 permits a displaced creditor to make an application to the Tribunal "within the local limits of whose jurisdiction he or the respondent ... actually or voluntarily resides, or carries on business or personally works for gain." The Court thus framed the separate but related question of whether the Union "actually or voluntarily resides, or carries on business or personally works for gain" within a Tribunal's local limits.

The Court observed that identical or substantially similar language appears in clause 12 of the Letters Patent of the Calcutta and Madras High Courts and in sections 19 and 20 of the Code of Civil Procedure. Because those statutory and charter provisions had been considered by earlier High Courts, the Court reviewed the relevant caselaw.

The Court relied upon a consistent line of authorities starting with Doya Narain Tewary and Rodricks, and followed by decisions of various High Courts (Calcutta, Madras, Lahore, Punjab, Bombay). Those authorities held that the tests of "residing", "dwelling", "carrying on business" or "working for gain" could not be applied to the Secretary of State/Government. The opinion emphasises that these cases have been followed in subsequent High Court decisions and by a Division Bench of the Bombay High Court in a direct s.13 matter (Luchhmandas H. Advani), which concluded that the Union of India cannot be predicated to "ordinarily reside" in the territories to which the Act extends.

The Court then examined the appellants' arguments: that the Union of India is a juristic person under section 3(42) of the General Clauses Act and therefore must "reside" somewhere; and that various authorities and constitutional/statutory provisions (for example Article 390 permitting the Union to sue or be sued) show that the State is "in" India.

On each point the Court explained why those arguments do not establish the requisite factual or legal predicate for applying the residence/carrying-on-business tests to the Union:

  • Being a juristic or artificial person (a statutory fiction permitting suit) does not by itself mean the Union "ordinarily resides" within the territories contemplated by s.2(6)(c) or "actually or voluntarily resides" within the local limits for s.13 purposes. Article 390 and similar provisions address the manner in which a government may be sued, not its residence for jurisdictional tests under the Act.
  • Authorities cited by appellants (such as Doss and English dicta concerning the King as corporation) either rested on statutory fictions that are not analogous or are inapplicable because India is a Republic, not a monarchy. Thus those authorities do not help the appellants' contention that the Union satisfies the statutory residence tests.
  • Decisions that treat corporations (companies) as having a residence where their administrative offices are located (e.g., Steel & General Mills) are distinguishable: a government's position is not analogous to a private company, and that reasoning cannot be extended to find the Union a "displaced person" for purposes of the Displaced Persons Acts.
  • Earlier contrary dicta (for example in Maqbulunissa from the Allahabad High Court) were noted but the Court observed that subsequent Supreme Court decisions show such dicta to be incorrect and not authoritative for the present issues.
  • The Court accepted the observation (attributed to Chagla, C.J., in a Bombay decision and to the Division Bench of the Supreme Court in Bata Shoe Co.) that the Union of India is "ubiquitous" and that the tests of "residence" or "carrying on business" cannot meaningfully be applied to the Union; applying such tests would permit venue without regard to where the cause of action arose, which the authorities have rejected.

Based on this analysis and the consistent line of authority, the Court concluded that the Union of India neither "ordinarily resides in the territories to which the Act extends" for s.2(6)(c) nor "actually and voluntarily resides, or carries on business or personally works for gain" for s.13. Accordingly, the Tribunal correctly dismissed the applications and there was no scope to interfere with those orders.

Holding and Implications

Core Ruling: The Court dismissed the three appeals. The Union of India does not, for the purposes of the Displaced Persons (Debts Adjustment) Act, 1951, satisfy the statutory tests of residence or of carrying on business/working for gain relied upon in sections 2(6)(c) and 13. The Tribunal's orders dismissing the applications were upheld.

Direct consequences: Each appeal is DISMISSED and in each case the parties are to bear their own costs. The immediate practical effect is that the displaced creditors' applications under section 13 were not maintainable against the Union of India and remain dismissed.

Broader implications: The opinion rests on and follows an established line of authority that the residence/carrying-on-business tests cannot be applied to the Union of India; the Court did not purport to establish a novel principle but applied existing authorities to affirm the Tribunal's conclusions.

Concurrence: Falshaw, J. agreed with the judgment. The appeals were dismissed.

    Amar Nath Issar v. Union Of India And Another .

    Mehar Singh, J.:— This judgment will dispose of three first appeals against orders, Nos. 40 D/64, 97 D/54 and 101 D/54, as a common question of law arises in all the three appeals.

    2. In each case the claim is against the Union of India respondent in an application under section 13 of the Displaced Persons (Debts Adjustment) Act, 1951 (Act No. LXX of 1951), hereinafter to be referred as “the Act”, for an amount stated in the application. A preliminary objection was taken on behalf of the respondent, in each application that the respondent is not a ‘parson’, within the scope of sections 2(6)(c) and 13 of the Act, who either ordinarily or actually and voluntarily resides, or carries on business or personally works for gain in the territory of India and so no application under section 13 of the Act in competent. This has found favour with the Tribunal and by three separate orders of 22nd December, 1953 in F.A.O No. 40-D/54, of 29th April, 1954. In F.A.O 97-D/54, and of 29th April, 1954 in F.A.O No. 101 D/54, the applications have been dismissed. Each applicant has filed a separate appeal against the order. The question raised being of some importance a learned Single Judge has made reference to a larger Bench and this is how these appeals have come before us.

    3. The Union of India can by no consideration or by interpretation of any provision in the Act be described as a ‘displaced person’. The definition of “debt” in so far as a claim by a displaced person against a non-displaced person is concerned is to be found in section 2(6), which says—

    “S. 2(6) “debt” means a pecuniary liability, whether payable presently or in future, or under decree or order of a civil or revenue court or otherwise, or whether ascertained or to be ascertained, which—

    (c) is due to a displaced person from any other person (whether a displaced person or not) ordinarily residing in the territories to which this Act extends……”.

    4. In relation to this definition the question for consideration is whether the Union of India ordinarily resides in the territories to which the Act extends?

    5. Section 13 of the Act provides thus—

    “S. 13 Claims by displaced creditors against persons who are not displaced debtors.—At any time within one year after the date on which this Act comes into force in any local area, any displaced creditor claiming a debt from any other person who is not a displaced person may make an application, in such form as may be prescribed, to the Tribunal within the local limits of whose jurisdiction he or the respondent or, if there are more respondents than one, any of such respondents, actually or voluntarily resides, or carries on business or personally works for gain, together with a statement of the debt owing to him with full particulars thereof.”

    6. The question is whether the Union of India, respondent, “actually or voluntarily resides, or carries on business or personally works for gain “within the local limits of the Tribunal's jurisdiction.

    7. In clause 12 of the Letters Patent of the Calcutta and Madras High Courts the words used are—

    “… or if the defendant shall dwell or carry on business or personally work for gain within those limits. ……”

    8. There is no difference in the meaning of the words “dwell” and “reside” in so far as the question under consideration is concerned. These two words have the same meaning in so far as the question under consideration is concerned. In section 19 of the Code of Civil Procedure the words used are—

    “… the defendant resides, or carries on business, or personally works for gain, within the local limits of the jurisdiction of another Court……”

    9. In section 20 of the same Code similar expression has been used in these words:—

    “… actually and voluntarily resides, or carries on business, or personally works for gain …”

    10. It will be seen that the words used in clause 12 of the Letters Patent and sections 19 and 20 of the Code of Civil Procedure are identical to the words used in sections 2(6)(c) and 13 of the Act. Those words as used in clause 12 of the Letters Patent and in the two sections referred to of the Code of Civil Procedure came for consideration in Doya Narain Tewary v. The Secretary of State for India in Council . 1886 I.L.R 14 Cal. 256. and the learned Judges held that they did not apply to the Secretary of State for India in Council, in other words, to Government. In the Calcutta High Court some dissent was shown with that decision by Pigot, J. in one case and by Chaudhry, J. in another case, both referred to at pages 309 to 315 in Rodricks v. Secretary of State for India . 1912 I.L.R 40 Cal. 308. but in the last mentioned case Sir Lawrence Jenkins, C.J, approved of the previous Division Bench decision of the same court and the head note of the last case reads—

    “This Court has no jurisdiction to entertain a suit brought against the Secretary of State for India in Council where the cause of action has arisen wholly outside the ordinary original civil jurisdiction of this Court, on the sola ground that the Secretary of State for India in Council dwelt or carried on business or personally worked for gain within the local limits of Calcutta, the Capital of India at the time of the institution of this suit.”

    11. Those two cases have been followed by a Division Bench of the Calcutta High Court in Dominion of India v. R.C.K.C Nath & Co. . A.I.R 1950 Cal. 207., in the Madras High Court in C. Govindara Julu Naidu v. Secretary of State for India in Council . I.L.R 50 Mad. 449., in the Lahore High Court in R.J Wyllie & Co. v. Secretary of State . A.I.R 1930 Lah. 818., in Nagi Brothers v. Dominion of India . A.I.R 1951 Punj. 92., and in Shiv Parshad v. Punjab State . 1957 59 P.L.R 35., and in the Bombay High Court in Luchhmandas H. Advani v. Union of India . A.I.R 1956 Bom. 43.. Of these cases the last mentioned was a case arising out of an application under section 13 of the Act and the learned Judges considered the definition of “debt” in section 2(6)(c) of the Act and also the provisions of section 13 of the Act. They held, even though the learned Chief Justice, at page 44, observed that “it may be conceded that the Union of India is an artificial or juristic person” that it could not be predicated of the Union of India that it ordinarily resides in the territories to which the Act extends as contemplated by the definition of “debt” in section 2(6)(c), and, therefore, the claim not being in respect of a debt, the application was not maintainable. On the side of the appellant no single authority has been referred to in which it has ever been held that the Government ordinarily or actually and voluntarily resides, or carries on business, or personally works for gain in India or in the territories of the State concerned.

    12. However, on behalf of the appellants it has been strenuously urged that the Union of India is a corporal ion of the total inhabitants and subjects of India and is a ‘person’ having regard to the definition of that word in suction 3(42) of the General Clauses Act, 1897. In that provision the definition of the word ‘person’ reads—

    “Section 3(42) “person” shall include any company or association or body of individuals whether incorporated or not.”

    13. It is further pointed that once it is conceded that the Union of India is a corporation and as such a person, it must reside somewhere and it cither resides where its main seat is or in every nook and corner of the country and so it comes within the scope of sections 2(6)(c) and 13 of the Act. Similar argument was repelled in the Calcutta. Madras and Bombay cases (Doya Narain Tewary v. The Secretary of State for India in Council, C. Govindara Julu Naidu v. Secretary of State for India in Council, and Lachhmandas H. Advani v. Union of India) and no fresh argument has been advanced to indicate that the correctness of the view taken in those cases is to be doubted. Certain authorities relied upon on behalf of the appellants in this connection may now be considered. The first case to which reference has been made in Doss v. Secretary of State for India in Council . 1875 XIX Equity Cases 509. in which at page 535, the learned Vice-Chancellor observes that the Secretary of State is in India and can be sued there. On the basis of this observation it is contended that similarly the Union of India is in India and can be sued here. Actually in Article 390 of the Constitution it has been provided that “the Government of India may sue or be sued by the name of the Union of India and the Government of a State may sue or be sued by the name of the State..” This more or less provides the manner and the method of impleading the Union of India or the State Government as a party defendant in a claim against the Exchequer. It does not say that the Union of India or the State Government resides anywhere or carries on business or personally works for gain. The same is the effect of the case last cited. But that case proceeded on consideration of section 65 of Act 21 and 22 Vict. 106 in which it was provided that “the Secretary of State in Council shall and may sue and be sued as well in India as in England by the name of Secretary of State in Council as a body corporate, ………”. It will be seen that by statutory fiction the Secretary of State in Council was to be treated as if a body corporate in the matter of suing and being sued. It was in the wake of that statutory provision that the learned Vice-Chancellor made the observation and I fail to see how it helps the appellants at all. Reference has then been made to Sutton Hospital case as digested at page 270 of Volume 13 of the English and Empire Digest, and reliance has been placed on the part of the head-note in it that the King of England is a corporation according to the common law of England, but that obviously can have no application in this country for there is no King here and that case is no authority that a Republic is a corporation. In this connection reliance has been placed on Article 459, at page 229, of Volume 59 of Corpus Juris where it is stated—

    “Although the right to sue is sometimes expressly conferred by statute, it is well-settled that, independently of any statutory provision therefor, a state may sue in its own courts either as Sovereign, or by virtue of its right as a political corporation. Also, a state may sue in Courts of a sister State, at least to enforce its rights as a corporation; and in federal courts, apparently in its sovereign capacity, as well as its corporate capacity.”

    14. This again deals with how the State is to be sued and may sue, it does not in the least settle the question of the residence of the State or its capacity to carry on business or work for gain. In Steel & General Mills Co. Limited v. General Accident Fire and Life Assurance Corporation Limited, Soni, J. held that a corporation like a company has its residence in a place where its administrative office is situate and is a displaced person within the scope of section 3 of the Displaced Persons (Institution of Suits) Act, 1948. The position of a Government is not the same as that of a corporation like a company and in the present cases there is no question of the Union of India being a displaced person. That case is entirely irrelevant so far as the present appeals are concerned. In Maqbulunissa v. Union of India . A.I.R 1953 All. 477., considering Article 226 of the Constitution and the challenge to its jurisdiction under that Article the Allahabad High Court was of the opinion that the Union of India can be said to be within the territorial jurisdiction of the Allahabad High Court as it has been given authority throughout the length and breadth of the country. Subsequent decisions of the Supreme Court show that this dictum is not correct and must be considered to be not a correct view. So none of the authorities relied upon by the appellants are helpful in any way in first showing that the Union of India is a body corporate, and secondly, even if it is considered to be an artificial or juristic person as Chagla, C.J was of the opinion at page 44 of Lachman Das H. Advani v. Union of India, in the words of the learned Chief Justice “even so it must he a person of whom it could be predicated that he ordinarily resides in the territories to which the Act extends”; and the learned Chief Justice, following a previous case of the same court, Bata Shoe Co., Ltd. v. Union of India . A.I.R 1954 Bom. 129., which case relied upon the authorities cited earlier in this judgment, observed as follows—

    “The Union of India by its very nature is ubiquitous, it resides in every part and corner of India, and, therefore, a litigant could say: “Never mind the cause of action I am entitled to file a suit in this Court because the Union of India resides here”. It is precisely because of this that the authorities have taken the view that the test of residence and even the test of carrying on the business cannot be applied where the defendant is the Union of India. Therefore, a plaintiff can only file a suit against the Union of India provided the cause of action accrues or arises within the jurisdiction of the Court where he intends to file a suit.

    There was no decision of our Court with regard to this question, but recently a division bunch of this Court contesting of Gajendragadkar and Vyas, JJ. in Bata Shoe Co. Ltd. v. Union of India after reviewing all the authorities have fallen into line with the view taken by the other High Courts and they have held that the expression “residing” or “working for gain” or “carrying on business” cannot apply to the Union of India”.

    15. The contention on behalf of the appellants is completely met by this observation of the learned Chief Justice. The result is that the Union of India neither ordinarily resides in the territories to which the Act extends within the scope of section 2(6)(c) nor actually and voluntarily resides, or carries on business or personally works for gain within the scope of section 13 of the Act. There is no scope for interference with the orders of the Tribunal. The three appeals are dismissed, leaving, in each case the parties to bear their own costs.

    16. Falshaw, J.:— I agree.

    17. Appeals dismissed.

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    Amar Nath Issar v. Union Of India And Another .
    (Nov 27, 1957)