31-01-2020 (Page 1 of 38) www.manupatra.com Trans Law .

BEFORE THE FEDERAL COURT

Decided On: 06.12.1940
Appellants: United Provinces Vs.
Respondent: Mt. Atiqa Begum and Ors.
JUDGMENT
Gwyer, C.J.
1. In this case the principal question to be decided is whether the Regularization
of Remissions Act, 1938 (14 of 1938), an Act of the Legislature of the United
Provinces, was within the competence of the Legislature which enacted it. The
litigation in which the question has arisen can be briefly described. The
defendants to the original suit were thekadars, a thekadar being, by statutory
definition, "a farmer or other lessee of proprietary rights in land, and in
particular of the right to receive rents or profits", with the terms of his lease or
theka embodied in a written instrument executed by the landlord. They were
sued by their lessors for arrears of rent for the year ending June 1931, and the
two following years at the rate reserved by the lease, and among other defences
pleaded that remissions of rent had been ordered by the Local Government
which ought to be taken into account in calculating the amount due. The
plaintiffs contended that these remissions were beyond the power of the
Government to order and that the defendants were not therefore entitled to rely
upon them. On this issue both the trial Judge and the District Judge on appeal
decided in the defendants' favour. The plaintiffs then appealed to the High
Court, and during the pendency of the appeal a Division Bench of the High Court
held in another case, Muhammad Abdul Qaiyum v. Secretary of State ('38) 25
AIR 1938 All 158, that remissions made in pursuance of the Government order
above referred to had no legal effect. In order to appreciate the legal questions
involved, it is necessary to refer to certain statutory provisions contained in the
Agra Tenancy Act, 1926, which at all material times regulated the relations
between the parties, though it has since been repealed and only re-enacted
with substantial alterations.
2. The purpose of the Act is indicated by its title, "an Act to consolidate and
amend the law relating to agricultural tenancies and certain other matters in
Agra," and it may be described as a Code of landlord and tenant law for the
province of Agra. At the end of that part of the Act which dealt with the
subject of rent and of the machinery whereby in certain circumstances rent
might be enhanced or abated, there was a fasciculus of sections entitled
"exceptional provisions," including three sections which require to be noticed.
Section 72 empowered a Court making a decree in a suit for arrears of rent to
allow, with the sanction of the Collector, such remissions from the rent payable
as might appear to the Court to be just, if the produce of the land had been
so diminished by drought, hail, deposit of sand or other like calamity during
the period for which the arrears were claimed that the full amount of rent
payable by the tenant for that period could not be equitably decreed. The
section then provided that where rent was thus remitted, the revenue authorities
should, on the report of the Court, grant a remission of land revenue in
proportion to the rent remitted for the corresponding area belonging to the
same landlord. Section 73 dealt with the converse case, and provided that when
for any cause the Local Government, or any authority empowered by it, remitted
or suspended for any period the whole or any part of the revenue payable in
respect of any land, a Collector might order that the rents of the tenants should
be remitted or suspended to an amount which shall bear the same proportion
to the whole of the amount payable in respect of the land as the revenue of
which the payment has been so remitted or suspended bears to the whole of the
revenue payable in respect of such land.
3. By Section 74, an order passed Under Section 73 was not to be questioned in
any civil or revenue Court, and no suit was to lie for the recovery of any rent of
which the payment had been thus remitted or suspended. It will be seen
therefore that, in the first case, the remission or suspension of land revenue
followed the remission or suspension of rent allowed by the Court and
sanctioned by the Collector; and that, in the second, remission of rent might be
ordered by the Collector only after the Local Government had remitted or
suspended the land revenue. Section 73 was expressly extended to thekadars
by Section 219 of the Act, but not Section 72. The reason no doubt was that
where the parties had embodied their contract in a formal written instrument,
they must in agreeing upon the amount of rent be assumed to have had in mind
the possibility of such occurrences as were dealt with in Section 72; but a
remission or suspension of land revenue Under Section 73 would destroy the
basis upon which they must necessarily have contracted and it would be
inequitable if a consequential adjustment were not permitted.
4. . In 1931, the United Provinces were faced with a catastrophic fall in
agricultural prices followed by threats to withhold rent on a large scale.
Faced with what was clearly a most difficult situation, the Government
appears to have acted with courage and promptitude. It took the view that the
most urgent problem was that of rent, and devised a scheme for the
systematic reduction of rents, varying with the circumstances of the
different districts, followed later by consequential adjustments in land revenue.
The plans adopted were described in a series of communiques issued from
time to time, the first being dated 29th April 1931 and the last 28th October
1932. The Government appears to have been well aware of the legal
position, for, in its last communique, a statement on the report of the rent
and revenue committee of the Legislative Council, it observed that
the Governor in Council recognizes that the action which Government
were compelled to take last year was not covered by any provision in the
existing law, and he is as anxious as any party that the position should
be regularized as soon as possible. But owing to the magnitude of the
problem the process will inevitably take time. The law was not framed to
meet such a position as has arisen from the recent severe fall in
prices.
5. The Government, in other words, were faced with a problem with which
executive governments have often to deal; a grave emergency, threatening
public order, and inadequate powers for meeting it. In circumstances such as
these, a government has to do the best it can, relying, if it exceeds the limit
of its powers, upon the willingness of the Legislature to indemnify it
subsequently; and Legislatures are usually prepared to grant a government
absolution, if they are satisfied of the gravity of the emergency, of the bona fides
of the action taken, and of the reasonableness of the measures adopted. A
government however always runs the risk of the measures which it has taken
becoming the subject of legal proceedings before it has obtained its indemnity,
and this is what happened in the present case. It is clear that Section 73 of the
Act, only enabled remissions of rent to be ordered, if there had been a prior
remission of land revenue; and therefore the orders of the Government on
this occasion had no legal force or effect and could not be relied upon by any
tenant in a suit by his landlord for the recovery of arrears of rent. The
Allahabad High Court so decided, as I have already stated; and it was
because of this decision that the Government found themselves compelled to
invite the Legislature to pass the Act which is the subject of the present
appeal; the question is whether that Act is effective for the purpose for
which it was designed. I think it right to observe in justice to the
Government, though the matter does not of course affect the legal position,
that while no doubt its action exposed it to much criticism, a substantial
number of landlords were willing to co-operate with it in meeting the
emergency.
This appears from the communique of 11th May 1931 in which the
Government recorded its appreciation of the spirit shown by a deputation of the
taluqdars of Oudh who had waived their legal claims and agreed without
condition to remit whatever Government considered fair to their tenants; and
also of the generosity with which the Agra landlords had shown their willingness
to grant remission to a large number of cultivators. It is desirable that this
should be said, for Courts of justice, while giving no countenance to the
theory that governments are at liberty to break the law whenever they find it
convenient to do so, ought to abstain from harsh or ungenerous criticism of
measures taken in good faith by those who bear the responsibility of
government, when suddenly faced with a serious and perhaps dangerous
situation.
6. . The Regularization of Remissions Act, 1938, had been passed before the
present appeal came before the High Court, and when the appellants sought
to take advantage of it, on the ground that the respondents could no longer
challenge the validity of the remission orders, the latter replied by challenging
the new Act itself. This point was referred to a Full Bench, which held the Act
to be beyond the competency of the Legislature to enact. The three learned
Judges who composed the Bench (Iqbal Ahmad, Bajpai and Mohammad Ismail,
JJ.) all took the view that the Act was contrary to the provisions of Section 292,
Constitution Act, because it attempted to legislate retrospectively; but Iqbal
Ahmad J. was also of opinion that none of its provisions were with respect to
any of the matters set out in List 2 of Schedule 7 to the Constitution Act, nor
indeed with respect to any of the matters in List 3, the Concurrent List.
7. Before the case was heard by the Full Bench, the High Court had caused
notice to be given to the Advocate-General of the Province, in order that, if
the United Provinces Government so directed, he might appear and support the
validity of the Act. The Advocate-General was accordingly heard; and when, after
the Full Bench had given judgment, the case came again before the High
Court to be finally dealt with, the Government applied to be made a party to the
appeal, in order that (as the application stated) it might have a right of appeal
to the Federal Court. The application not being opposed, the Government was
duly made a party; and its name appeared thereafter as respondents on the
record, under the style of the United Provinces Government, in addition to
those of the plaintiffs appellants and the defendants. In the final order of the
High Court, however, admitting the appeal to this Court, the parties on the
record are described as "the United Provinces, Applicant (sic) to the Federal
Court," with all the original plaintiffs and defendants as respondents. It is in
that form that the appeal has now come before us. It should be added that the
defendants did not enter an appearance in this Court and only the United
Provinces and the plaintiffs were represented at the hearing.
8 . In these circumstances counsel for the lessors took a preliminary objection
and contended in a very able argument that the Advocate-General ought not to
be heard, because the High Court had no power to make the Province a party to
the suit and the Province had therefore no right to appeal. He put it as a matter
of jurisdiction and not merely as a wrongful exercise of discretion by the High
Court. The application of the United Provinces was made Under Order 1, Rule
10(2), Civil P.C., the material words of which are as follows ;
The Court may at any stage of the proceedings, either upon or
without the application of either party, and on such terms as may appear
to the Court to be just, order. . . that the name of any person who
ought to have been joined, whether as plaintiff or defendant, or whose
presence before the Court may be necessary in order to enable the Court
effectually and completely to adjudicate upon and settle all the questions
involved in the suit, to be added.
9. Counsel for the lessors argued that the desire of the Province to secure the
right of appeal did not make Order 1, Rule 10(2) applicable to the case; but,
he also based his argument on broader grounds and contended that the mere
fact that the validity of provincial legislation was being challenged was no
sufficient reason for making the Province a party to a suit between private
persons.
10. . I desire to say at the outset that, assuming for the moment that there
was jurisdiction to add a party to represent the executive Government of the
Province, that party ought not in my opinion to have been the Province itself.
It is true that by Section 170(1), Constitution Act, a Provincial Government may
sue or be sued by the name of the Province, and may, subject to any provisions
which may be made by Act of the Federal or the Provincial Legislature, sue or be
sued in relation to its affairs in the like cases as the Secretary of State in
Council might have sued or been sued if the Act had not been passed. But it
seems to me that where the validity or constitutionality of provincial
legislation is in issue, and not any matter relating to the proprietary rights or
interests of the Province, it is more convenient and more correct that the
Advocate-General should represent the executive Government for the time
being of the Province. This is the Dominion practice, and in my opinion it
ought to be followed in India. The Secretary of State was first made liable to
be sued by Section 65, Government of India Act, 1858, and the same suits
and remedies were made available against him as had been available against
the East India Company. He was no doubt substituted for the East India
Company after the transfer of all the rights of the Company to the Crown,
because under the constitutional arrangements made by the Act of 1858 he
had complete control of all the revenues of India. But the question of the
constitutionality of an Indian statute could rarely have arisen before the
present Constitution Act, and even more rarely still in the case of a provincial
statute; and it seems to me, as I have said, that the more convenient course
is to confine the operation of Section 176(1) to cases in which the proprietary
rights or interests of the Provinces are affected, and, if the Government of a
Province desires to uphold the validity of a Provincial Act or to challenge that
of a Federal Act, it should direct the Advocate-General of the province to
intervene on its behalf.
11. . A number of cases were cited on the true construction of Order 1, Rule
10. Counsel for the lessors relied principally upon Prayaga Doss Jee Varu v.
Board of Commissioners for Hindu Religious Endowments, Madras ('26) 13 AIR
1926 Mad 836 in which Srinivasa Ayyangar J. refused an application by the
Secretary of State to be added as a party in a case said to involve the
question whether an Act of the Provincial Legislature was ultra vires. The
learned Judge, treating the case as one of first impression, held that the words
"all the questions involved in the suit" must refer to questions as between the
parties to the litigation, that neither on principle or authority could the
Secretary of State be regarded as a necessary or a proper party, and that he
ought not to be joined as an additional defendant. He concluded his
judgment with these words:
Having regard to the number and variety of legislative bodies and
authorities in the country at the present day, paramount, imperial,
local, delegated, subordinate, etc., I feel that questions of ultra vires are
certain to be raised in the Courts in increasingly large numbers of
cases and I refuse to contemplate with equanimity the prospect of the
Secretary of State for India being required by every defendant to be
made a party in every one of them.
1 2 . This judgment was criticised and dissented from in Secretary of State
v. Murugesa Mudaliar, AIR 1929 Mad 443 by Venkata Subbarao J., a case in
which the plaintiff had brought a suit against a district board for a declaration
that he had been duly elected a member of the board by a resolution passed at
the meeting of a certain
taluq board. The Government applied to be joined as a defendant, but both
plaintiff and defendant opposed the application. It was held that since by a
local Act Government had the power of control over all local boards in the
province and could suspend the execution of any resolution (as they had
apparently done in the case of the taluq board), it was a proper party to the suit
and ought to be added. The learned Judge was of the opinion (which I cannot
myself share) that Srinivasa Ayyangar J., had in the earlier judgment ignored the
distinction made in Order 1, Rule 10 between
(1) persons who ought to have been joined, and (2) persons whose
presence is necessary to enable the Court completely and effectually to
adjudicate upon and settle all the questions involved in the suit, i. e.,
between necessary parties and proper parties. Basing his opinion on earlier
English and Indian authorities, he held that the Court was not bound to decide
a dispute in the absence of persons whom it most vitally concerned, and that
in the case before him it was the Government who had interfered with the
alleged right of the plaintiff by suspending the execution of the resolution of the
taluq board. Hence he concluded that the Government was a proper party to
the suit.
13. It is not clear to me that Srinivasa Ayyangar J., would have come to a
conclusion contrary to that of his brother Judge, if the later case had come
before him; for different principles appear to be involved in the two cases.
The question of the validity of the Act could certainly have been decided in the
absence of the Secretary of State in the first case, though it might have been
convenient to have him represented before the Court. In the second case, it
was in effect the action of the Government itself of which the plaintiff
complained. But it is obvious that in the later case a wider view was taken of the
powers conferred by Order 1, Rule 10, and stress was laid rather upon the words
"effectually and completely to adjudicate upon and settle all the questions
involved in the suit" than upon the words "necessary to enable the Court"
which preceded them. The Allahabad High Court appear to have gone further in
Mt. Jaimala Kunwar v. Collector of Saharanpur ('34) 21 AIR 1934 All 4 and to
have held that the Court has inherent powers of its own in the matter which
are not restricted by Order 1, Rule 10; but I should always hesitate to rely
on unspecified and undefined inherent powers as a justification for any action
taken, if it is possible to avoid doing so. In any case, the first of the Madras
decisions is directly in point in the present case, though the report does not
indicate how the question of ultra vires in fact arose in connection with the
provincial statute which was under discussion, nor is it easy to see how
under the Government of India Act, 1919, and the Devolution Rules, questions
of ultra vires in the case of provincial statutes could have come before the Court.
The decision in the later case may have been justified on the facts, but those
facts were very different from those which are now under consideration.
1 4 . Since the new Constitution Act, however, the position with regard to
the competence of Indian Legislatures, whether the Central Legislature or
the Legislatures of the Provinces, is completely changed; and the cases
which have already come before this Court during its brief history show the
difficulty and complexity of the disputes in which questions of legislative
competence are involved. I think that it would be a matter of great regret to
this Court if in any such case it had not the assistance of the Advocate-General
of the Province concerned, and this point was not overlooked when the rules of
the Court were drafted: see Federal Court Rules, Order 36. But, in the
absence of such an express rule in the Code, it is necessary to decide, first,
whether, the Advocate-General was rightly empowered to intervene as a party
on the record, and, secondly whether in the particular circumstances of the
present case he has an independent right of appeal.
15 . It can but rarely happen, in cases between private persons involving the
constitutional validity of a statute, that an Advocate-General is a "necessary"
party; and I am not prepared to say without further consideration that he is even
a "proper" party in each and every case. But in a number of cases, of which
the present is an example, the question whether a statute is or is not valid
involves the question of the scope of the executive authority of the province.
The executive authority of a province vests in the Governor on behalf of the
Crown, and extends to all matters with respect to which the Legislature of
the province has power to make laws (Section 49, Constitution Act). If then a
provincial Act purporting to confer powers upon the executive is held to be
beyond the competence of the Provincial Legislature, the scope of the executive
authority of the province is thereby declared to be more restricted than
Legislature and Government had supposed or intended. If the Act impugned in
the present case is held to be invalid, orders issued by or under the authority
of the Provincial Government in the past can be questioned in a Court of law,
and the Government would have no power to issue any orders of the kind in the
future. It is therefore impossible for a Court so to decide in litigation between
private parties without imposing a hitherto unsuspected restriction upon the
powers of the Government; and it does not seem right that this should be
done without the Government being a party to the proceedings before the
Court. In my opinion, the Advocate-General of the province is a proper party, in
the sense that without him the Court cannot effectually and completely
adjudicate upon and settle all the questions involved in the suit. I am not
prepared to extend the operation of Order 1, Rule 10, beyond what is
necessary, but it seems to me that to allow the Advocate-General to intervene as
a party in cases of this kind is for the reasons which I have given within the
spirit and I think also the letter of the rule.
16. . The Judicial Committee held in Rsquimalt and Nanaimo Railway Co. v.
Wilson (1920) AC 358 that when an action, if successful, will affect the rights
claimed by the Crown, but the plaintiff has against the Crown no claim to
which the procedure by petition of right is applicable, the Attorney-General is
nevertheless a necessary and proper party and may be joined as a defendant
by the plaintiff. In that case the validity of a Crown grant, and not of a
statute, was challenged, but I draw attention to the following observations of
Lord Buckmaster, who delivered the judgment of the Committee:
It is quite true that the title of the Crown to the land in question is
not in controversy, nor is the Crown asked to do any act or grant any
estate or privilege; but in the event of the plaintiffs' success the rights
existing in the Crown and consequent upon the grant to the respondents
will cease. If these interests lay in a third party, he ought certainly to
be added as a defendant and that is the best means of testing the
necessity of the attendance of the Crown (at page 363).
17. Adapting these words, I might say that in the event of the lessors succeeding
in the present case, certain rights of the Crown, that is, of the executive, of the
province will cease to exist, in the sense that they will no longer have that
extended effect which it was believed that the impugned Act had given them.
In a recent case in a, Canadian Province, Beauharnois L.H. & P. Co. v. Hydro-
Electric Power Commission (1937) 3 DLR (Ont) at p. 458 a local Judicature
Act had provided, that no Act of the Provincial Legislature should be adjudged
invalid in any proceedings until after notice had been given to the Attorney-
General of Canada and to the Attorney-General of the province and that the two
Attorneys-General were entitled as of right to be heard, notwithstanding that
the Crown was not a party to the proceedings. This enactment was held not to
preclude the making of the Crown, represented by the Attorney- General, a
party to an action, and the Court stating that in cases admitting of doubt it was
desirable that the Crown should be made a party, declared the Attorney-General
to be a proper, if not. a necessary, party to the litigation before it. It is not
necessary for me to say whether I agree with this more general proposition ;
I am content to limit my observations to cases where to challenge the validity of
a statute would, if successful, affect the executive authority of the province. It
would no doubt be often, perhaps usually, convenient if the Court had the
Advocate-General of the province before it, when the validity of a provincial
statute is in issue; and High Courts may desire to consider whether they
should not frame a rule of their own upon the subject which will set all doubts
at rest.
18. . It seems to me however by no means to follow that, because the
Advocate- General of the province has been permitted to be put on the record as
an intervener in the suit, he is also entitled to prefer an independent appeal
to this Court, in the absence of any appeal by the parties. He has an interest
in the litigation, it is true, but the suit is after all between private parties;
and if they are content with the decision of the Court, whether it be in favour
of the plaintiff or the defendant, it is difficult to see on what principle the
Advocate-General can be held to have a locus standi sufficient to justify an
independent appeal of his own. If one of the parties appeals, then of course the
Advocate-General has a right to appear before this Court, since he is an
intervener in the suit; but he is a party only in a very special and limited
sense. The doubts which I have felt on this point are not diminished by a very
recent decision of the Canadian Supreme Court:Attorney Gen of Alberta
(Intervenant)
v. Kazakewich (1937) Can SCR 427. In that case the Supreme Court of Alberta
had held that a statute under which a husband had been ordered to pay a
certain sum towards the maintenance of his wife was beyond the competence of
the Provincial Legislature to enact. The Attorney-General of the Province had
intervened to uphold the validity of the Act, and special leave to appeal to the
Supreme Court of Canada had been granted both to the Attorney-General and
to the wife, but the wife failed to perfect her appeal. The Supreme Court were of
opinion that though, on an appeal to the Court by the wife, the Attorney-General
would, in the ordinary course, have the right to appear in order to support the
validity of the Act, he had no status to appeal to the Court, so long as the wife
had not perfected her appeal, and that until she had done so the Court had no
jurisdiction. This decision seems to me, if I may respectfully say so, to be
based upon sound principle, and in my opinion this Court ought to follow it.
There is a significant observation by Lord Haldane in John Deere Plow Co. v.
Wharton ('14) 1 AIR 1914 PC 174 at p. 334, that Attorneys-General
intervening in private litigation were only entitled to present their views to
the Judicial Committee and had no right of reply. If an Attorney-General had
in such circumstances an independent right of appeal of his own, it is difficult to
see why he should not be allowed a right of reply like any other appellant.
in the course of the proceedings. It is, in my opinion, impossible for this
Court, at the instance of a third party who had no direct interest in the
original suit, to order the High Court to vary the decree which it has given as
between plaintiffs and defendants; and the difficulties which would arise if any
other view were taken lend additional force to the doubts which I have already
expressed on the right of the province to appeal at all. I think therefore that the
appeal should be dismissed, and my brothers concur, though for different
reasons. In these circumstances it is not necessary for me to express an
opinion on two other points which were strongly argued before us by counsel
for the lessors, that is to say, whether the Act ought to be construed as having
no application in the case of suits pending at the time when it is passed, and
whether the provision in it which forbids the remissions from being questioned in
a Court of law has the effect of validating them for all purposes, and of
preventing any suit for recovery of the rent alleged to have been remitted.
Many interesting questions of law arise in connection with both these points,
which might be profitably discussed on a more appropriate occasion, but I
express no opinion on them now. The appeal will be dismissed. There will be
no order as to costs.
 27. Preliminary objection -- Mr. Pearey Lal Banerji has raised a preliminary
objection to the hearing of the appeal filed by the United Provinces. The
statement in the order of the High Court that the application was not opposed
and the fixing of a date with consent, implied that some advocate for the
plaintiffs-appellants was present and did not think it fit to oppose the
application. There is no affidavit before us to show that both of the appellants'
advocates were absent, or to show that the advocate who was present had no
authority to accept notice. They admittedly appeared at the next hearing. It
is however urged that their acquiescence would at best amount to an
admission on a point of law that an application for impleading the United
Provinces Government was not improper, and so there should be no estoppel
against the objection being considered on its merits here.
Section 107(2), Civil P.C., confers on an appellate Court the same power and
directs it to perform, as nearly as may be, the same duties as are conferred on
Courts of original jurisdiction. Courts of original jurisdiction have Under Order
1, Rule 10(2), Civil P.C., power to order that the name of any person who
ought to have been joined or whose presence before the Court may be necessary
in order to enable the Court effectually and completely to adjudicate upon and
settle all the questions involved, be added. A person would be a necessary
party if he ought to have been joined, that is to say, in whose absence no
effective decree can be passed at all. He would be a proper party to be
impleaded if his presence is necessary for an effectual or complete
adjudication. In a suit between a landholder and his tenant, the Provincial
Government cannot be considered a necessary party at all, as a proper decree
can certainly be passed in their absence. But when in such a suit the validity of
an Act of the Provincial Legislature is in question, the adjudication would affect
a large section of the public, and the Provincial Government would be
indirectly interested in such an adjudication. In the present case, the
Government were interested to this further extent that the effect of the High
Court's ruling would be to nullify certain orders, previously issued by the
Government, the enforceability of which was indirectly attempted by the
impugned Act. Apparently, the defendants were too poor to think of preferring
an appeal to the Federal Court; and the High Court thought that it would not
only be convenient but quite fair to make the U. P. Government a respondent to
enable it to secure a more authoritative pronouncement. As the Act was passed
during the pendency of the High Court appeal, there was no earlier occasion on
which the Government could have been impleaded. It is contended before us
that the powers of an appellate Court are restricted within the limits imposed by
Order 41, Rule 20, and that the same restriction is imposed on a Court hearing
a second appeal under Order 42, Civil P.C. That rule no doubt permits of making a
person respondent, who was a party to the suit in the original Court, and who has
not been made a party to the appeal, but is interested in the result of the
appeal. Obviously, this rule would not apply to the present case. But the language
of the rule does not show that it is exclusive or exhaustive so as to deprive a
Court of any inherent power which it may possess and can exercise in special
circumstances, and which has been saved by Section 151, Civil P.C.
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