# SHRI MANNA LAL AND ANOTHER v. COLLECTOR OF JHALAW AR AND OTHERS

- **Citation:** [1961] 2 S.C.R. 962
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Case number:** Civil Appeal No. 88 of 1957
- **Bench:** B. P. Sinha, s. K. DAS, A. K. Sarkar, N. Rajagopala Ayyangar, J. L. Mudholkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/shri-manna-lal-and-another-v-collector-of-jhalaw-ar-and-others-1927
- **Pages:** 9

## Headnote

Public Demand-Loan due to Jhalawar State Bank-Assets
transferred to United State of Rajasthan under covenant, later vested
in State of Rajasthan-If recoverable as a public demand-Certificate--Reqt<irements, if applicable to loans due to GovernmentSpecial f~cilities to ~overnment as f!anker, whet':er discriminatoryConstitut1on of India, Art. r4-Ra;asthan Public Demands Recovery
Act, r952 (Raj. V of 1952), s. 4·
The Jhalawar State Bank was originally a Bank belonging
'
to the rulin!,l State of Jhalawar and its assets, including moneys
•
..... •
2 s.c.R. SUPREME COURT REPORTS
963
due to it, became vested in the United State of Rajasthan under
the covenant executed by the Ruler of Jhalawar along with
other Rulers by which the United State of Rajasthan was formed. On the promulgation of the Constitution of India, the
United State of Rajasthan became the State of Rajastban in the
Indian Union and all its assets, including the Jhalawar State
Bank and its dues, vested in the State of Rajasthan.
Moneys due from the appellants in respect of advances made
to them by the Jhalawar State Bank at a time when it belonged
to the ruling State of Jhalawar, could be recovered by the State
of Rajasthan after the Bank had become vested in it, as a public
demand under the lfajasthan Public Demands Recovery Act,
i952.
The form prescribed in the Rajasthan Public Demands Recovery Act, in which a certificate has to be drawn up and filed
under s. 4 of the Act for commencing proceedings for recovery
of public demands under the Act in so far as it required a statement as to the period for which a public. demand is due, was not
applicable to a public demand like a loan due to the Government
in respect of which there is no question of any period for which
it is due.
The Rajasthan Public Demands Recovery Act did not offend
Art. 14 of the Constitution as giving special facility to the
Government as a banker for the recovery of the bank's dues for,
the Government can legitimately be-put in a separate class for
this purpose.

## Text

962
SUPREME COURT REPORTS
[1961)
x960
_
the amount immediately not expended was not taxHoshiarpur Efoc- able as revenue.
t.ic supply Co.
The receipts though related to the business of the
. v'.
assessee as distributors of electricity were not incidenCommissioncr of t l
· th
f h
·
f
I
t
S . 1 a to norm
e course o t e carrymg on o the assesncome- ax,
im a
, b .
h
_
see s usmess; t ey were receipts for bringing into existShah J.
ence capital of lasting value.
Contributions were not
ma.de merely for services rendered and to be rendered,
but for installation of capital equipment under an
agreement for a joint venture. The total receipts being
capital receipts, the fact that in the installation of
capital, only a certain amount was immediately expended, the balance remaining in hand, could not be
regarded as profit in the nature of a trading receipt.
On that view of the case, in our judgment, the High
Court was in error in holding that the excess of the
receipts over the amount expended for installation of
service lines by the assessee was a trading receipt.
1960
Dacember 7
The appeal is allowed and the question submitted
to the High Court is answered in the negative. The
assessee is entitled to its costs in this court as well as
in the High Court.
Appeal allowed.
SHRI MANNA LAL AND ANOTHER
v.
COLLECTOR OF JHALAW AR AND OTHERS
(B. P. SINHA, c. J., s. K. DAS, A. K. SARKAR, N. RAJAGOPALA AYYANGAR and J. L. MUDHOLKAR, JJ.)
Public Demand-Loan due to Jhalawar State Bank-Assets
transferred to United State of Rajasthan under covenant, later vested
in State of Rajasthan-If recoverable as a public demand-Certificate--Reqt<irements, if applicable to loans due to GovernmentSpecial f~cilities to ~overnment as f!anker, whet':er discriminatoryConstitut1on of India, Art. r4-Ra;asthan Public Demands Recovery
Act, r952 (Raj. V of 1952), s. 4·
The Jhalawar State Bank was originally a Bank belonging
'
to the rulin!,l State of Jhalawar and its assets, including moneys
•
..... •
2 s.c.R. SUPREME COURT REPORTS
963
due to it, became vested in the United State of Rajasthan under
the covenant executed by the Ruler of Jhalawar along with
other Rulers by which the United State of Rajasthan was formed. On the promulgation of the Constitution of India, the
United State of Rajasthan became the State of Rajastban in the
Indian Union and all its assets, including the Jhalawar State
Bank and its dues, vested in the State of Rajasthan.
Moneys due from the appellants in respect of advances made
to them by the Jhalawar State Bank at a time when it belonged
to the ruling State of Jhalawar, could be recovered by the State
of Rajasthan after the Bank had become vested in it, as a public
demand under the lfajasthan Public Demands Recovery Act,
i952.
The form prescribed in the Rajasthan Public Demands Recovery Act, in which a certificate has to be drawn up and filed
under s. 4 of the Act for commencing proceedings for recovery
of public demands under the Act in so far as it required a statement as to the period for which a public. demand is due, was not
applicable to a public demand like a loan due to the Government
in respect of which there is no question of any period for which
it is due.
The Rajasthan Public Demands Recovery Act did not offend
Art. 14 of the Constitution as giving special facility to the
Government as a banker for the recovery of the bank's dues for,
the Government can legitimately be-put in a separate class for
this purpose.
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
88 of 1957.
Appeal from the judgment and order dated January
18, 1956, of the Rajasthan High Court (Jaipur
Bench) in D.B.C. Writ Petition No. 262 of 1954.
S. K. Kapur and Ganpat Rai, for the appellants.
N. S. Bindra and D. Gupta, for the respondents.
1960. December 7.
The Judgment of the Court
was delivered by
SARKAR, J.-The appellants are traders of Jhalawar. Respondent No. 1, the Collector of Jhalawar,
served on the appellants a notice under s. 6 of the
Rajasthan Public Demands Recovery Act, 1952, hereafter called the Act, for the recovery from them as a
public demand, of Rs. 2,24,607 /6/6 said to be due on
account of loans taken by them from the Jh~lawar
State Bank.
The appellants filed a petition under
s. 8 of the Act contending, among other things, that
Shri Manna Lal
a;. Another
v.
Collector of
jhalawar
a;. Others
Sarkar j.
964
SUPREME COURT REPORTS
[1961]
i96o
the amount sought to be recovered from them was
Sh . M
L 1 not a public demand. Respondent No. 1 appears to
rt
anna
a
d
.
.,. Another
have calle upon the appellants to prove that 1t was
v.
not a public demand. The appellants without proCollector of
ceeding further before respondent No. 1, filed a petiJhalawar
tion in the High Court of Rajasthan for the issue of
"' Others
a writ quashing the proceedings under the Public
Sarllar J.
Demands Recovery Act. The High Court dismissed
the petition but granted a certificate that the case was
fit for an appeal to this Court. Hence the present
appeal.
The only question raised in this appeal is whether
any loan due to the Jha.lawa.r State Bank could be
recovered as a. public demand. A "public demand"
within the meaning of the Act is "any money payable
to the Government or to a department or a.n officer of
Government under or in pursuance of a written instrument or agreement". The Government here means
the Government of Rajasthan for the Act was passed
in 1952 by the Rajasthan State Legislature. The
question then is whether money due to the Jhalawar
State Bank, is money payable to the Government of
Rajasthan.
·
Now, the Jhalawar State Bank was started in 1932.
At that time Jhalawar was a ruling State. Sometime
in or about April, 1948, the State of Jhalawar, a.long
with nine other ruling States of Rajputana, integrated
and formed the United State of Rajasthan under a
covenant executed by the Rulers of these States. One
of the articles of this covenant provided, "All the
assets and liabilities of the covenanting States shall
be the assets and liabilities of the United State." Subsequently, on March 30, 1949, the States of Bikaner,
Jaipur, Jaisalmer and Jodhpur joined the United
State of Rajasthan. On the promulgation of the Constitution of India, the United State of Rajasthan
became a Part B State in the Indian Union. The
assets of the previous ruling State of Jhalawar, which
had earlier vested in the United State of Rajasthan,
thereupon passed to and devolved upon the State of
Rajasthan in the Indian Union.
•
i
(
2 s.c.R. SUPREME COURT REPORTS
965
The proceedings under the Act against the appelx960
lants were started by the filing of a requisition with Sh . M
L 1
N
b .
rs
anna a
respondent No. 1 by respondents
os. 2 and 3,
emg
& Another
respectively the Treasury Officer, Jhalawar, and the
v.
Recovery Officer, Jhalawar State Bank, under s. 3 of
Collector of
the Act stating that the amount earlier mentioned
Jhalawar
was due from the appellants to the Government 'of
& Others
Rajasthan in respect of the claims of the Jhalawar
Sarkar J.
State Bank against them. This was done presumably
shortly prior to June 16, 1953, on which date respondent No. 1 signed a certificate specifying the amount
of the demand and certain other particulars and filed
it in his own office under s. 4 of the Act.
A notice of
the signing and filing of the certificate was served
upon the appellants under s. 6 of the Act. This notice
and the subsequent proceedings have been referred _to
in the beginning of this judgment.
'l'he claim thus is in respect of moneys due to the
Jhalawar State Bank. If that Bank was not the property of the Jhalawar State, then its dues cannot of
course be said to have merged in the present State of
Rajasthan. The appellants first contended that the
Jhalawar State Bank was not the. property of the
State of Jhalawar. The only material to which we
have been referred by the appellants in support of
this contention is certain rules framed by the Ruler of
Jhalawar in respect of the Bank. It was pointed out
that the rules showed that the Bank was like any
other commercial enterprise. We are unable to agree
that for this reason it could not be an institution
belonging to the State. There was nothing to prevent
the Jhalawar State carrying on a commercial undertaking. If it did so, the assets of that undertaking
would be those of tlie State and, in the circumstances
earlier mentioned, must now be held to be vested in
the State of Rajasthan.
It was also said that the rules showed that the
management of the Bank was in the hands of a board
of which certain non-officials were members. It was
contended that this showed that the Bank was not the
property of the State. It is clear, however, from the
122
966
SUPREME COURT REPORTS
[1961)
.
z96o
rules that the Bank was not the properiy of the board.
Shri Manna Lal Again, the board was constituted from time to time by
& Another
the Ruler and the majority of its members were offiv.
cers of the State. This would show that the Ruler
Colleetor of
was in full control of the management of the
Jhalawar
Bank as a State undertaking. It is true that the
& Others
rules indicate that the Bank might sue or be sued
Sarkar J.
in respect of transactions made by or with it. That,
however, would not indicate that the Bank had
a separate identity. The rules in this connection only
indicate in what name suits could be brought by or
against the State's banking business. On the other
hand, it is perfectly clear that the capital of the Bank
was derived solely from the funds of the Jhalawar
State. No part of it was contributed by anyone else.
One of the objects of the Bank was to invest the surplus funds of the State. The entire transaction of the
business of the Bank was in the ultimate control of
the Ruler. The Jhalawar State guaranteed the financial liabilities of the Bank. The name "Jhalawar
State Bank" also indicates that the institution belonged to the State of Jhalawar. About the time of the
formation of the United State of Rajasthan in 1948,
the Chief Executive Officer, Jhalawar, issued a public
notification in which, after referring to the article in
the Covenant which provided that the assets and
liabilities of the covenanting States would be the assets
and liabilities of the United State, he proceeded to
state that by virtue of this article, on the formation of
the new State, the responsibility and guarantee of
the existing transactions with the different departments of Jhalawar State or the Jhalawar State Bank,
would be of the newly formed United State of Rajasthan. This would show that the assets of the Jhalawar State Bank were being treated by all concerned
as assets of the former Jhalawar State, which, upon
the formation of the United State of Rajasthan, had
vested in the latter State. Further, no one else has at
any time made any claim to the assets of the Jhalawar State Bank. It is, therefore, clear beyond all
doubt, that the Jhalawar State Bank was one of the
assets of Jhalawar State and is now vested in the
State of Rajasthan.
,f
••
•
-t
•
2 S.C.R. SUPREME COURT REPORTS
967
The second point argued for the appellants is that
the dues of the Jhalawar State Bank have in any
case been transferred by the Government of Rajasthan to the Bank of Rajasthan Ltd. under certain
Notifications to which we shall presently refer. It is
said that the Bank of Rajasthan Ltd. is, as its name
shows, obviously a limited company having an independent existence and is not a department of the
Government of Rajasthan State. It is also contended
that this vesting took place before the proceedings
under the Act had started. Therefore, it is said that
at the commencement of those proceedings, the amount
claimed from the appellants as due to the Jhalawar
State Bank, was not a public demand within the
meaning of the Act.
This contention which is based on the Notifications,
earlier mentioned, does not seem to us to be well
founded.
We will assume for the present purpose
that the Bank of Rajasthan Ltd. is not a department
of the Government of Rajasthan State. The question
is whether the effect of these Notifications, which
were two -in number, was to vest the dues of the
Jhalawar State Bank in the Bank of Rajasthan Ltd.
The first Notification is dated February 15, 1951. It
stated that the Government of the State of Rajasthan
had decided to transfer, among others, the Jhalawar
State Bank, to the Bank of Rajasthan Ltd. It was
contended that by this Notification the assets of the
Jha.lwar State Bank were transferred to the Bank of
Rajasthan Ltd. We do not think that that was the
effect of this Notification. It contained two very significant provisions which we set out below:
"All debtors of the State Banks irrespective of
the class, category and nature of the debt are hereby
informed that within one month from the date of
publication of this notice they should clear accounts
with the aforesaid State Banks which will continue
to function only to clear the old accounts, and thereafter their accounts with the securities pledged will
automatically be transferred to the Bank of Rajasthan Ltd., who will be authorised on behalf of the
State, to effect necessary recoveries and settle accounts.
Shri Manna Lal
& Another
v.
Collector of
Jhalawar
a;. Others
Sarkar].
.1960
Shri Manna !,al
0- Another
v.
Collector of
Jhalawar
&- Others
Sarkar ].
968
SUPREME COURT REPORTS
[1961]
The transfer of these debts to the Bank of Ra.ja.sthan Ltd. will not, on any account, take a.way the
inherent right which the Raja.sthan Govt. possess in
these various transactions ma.de on the guarantee of
the respective convenanting States to make recoveries
and settle accounts in accordance with the existing
rules or laws that may hereafter be made to effect
recovery of State dues or State debts."
It is clear from these provisions that the Bank of
Rajasthan Ltd. was being authorised "on behalf of
the State", that is, the Government of the State of
Rajasthan, to recover the amounts due to the Jha.la.-
war State Bank. The transfer of the latter Bank to
the Bank of Raja.sthan Ltd. was to be subject to this
qualification that its dues would remain the dues of
the Government of the State of Rajasthan and would
only be recovered by the Bank of Ra.jasthan Ltd. as
the agent of that Government. The last para.graph
set out above emphasises this position. It preserves
the right of the Government of the State of Raja.stha.n
to recover the a.mounts due to the Jha.la.wa.r State
Bank in accordance with any law that might be made
after the date of the Notification. The position then
is that under this Notification the debts due to the
Jhalawar Bank were not transferred to the Bank of
Rajasthan Ltd: and remained payable to the Government of Rajastha.Ii. The other Notification is dated
April 16, 1952, and it repeats that the banks mentioned in the earlier Notification, including the Jha.la.wa.r
State Bank, "will be merged in the Bank of Rajas.
than Limited". It is said that the effect of this Notification was in any event to cancel the earlier Notification, in so far as the latter preserved the power of
the State to collect the debts of the J hala.wa.r State
Bank. We are wholly unable to agree. This Notifi.
cation only reiterates the intention of the Government
of the State of Rajastha.n to merge the banks named,
in the Bank of Ra.ja.sthan Ltd. It says nothing specifically about the dues of these banks or as to their
recoveries, with regard to which, therefore, the provisions of the previous Notification must have effect.
Furthermore, there is nothing to show that the debts
,
• ..
,
•
•
••
2 S.C.R. SUPREME COURT REPORTS
969
due to the Jhalawar State Bank were by .any docuI960
ment specifically transferred to or vested in the Bank Shri J\-;::;;,..a Lal
of Rajasthan Ltd. and thereupon became its property.
& Another
That being ~so, there is no basis for the contention
v.
that the debts due from the appellants are now due
Collector o/
to the Bank of Rajasthan Ltd. in its own right. It
Jhalawa•
would follow that such debts remained debts due to
Sarkar ].
the Government of the State of Rajasthan.
The third point argued was that the moneys claimed from the appellants were not payable under a
written instrument or agreement. This contention is
wholly unfounded. It appears that the loans were
granted by the Jhalawar State Bank to the appellants
on their own applications. In each application the
appellants stated that they wanted a loan from the
Jhalawar State Bank and promised to repay it with
interest at the x:ate mentioned in it.
By these
applications the appellants also proposed to hypothecate various properties belonging to them as security
for the due repayment of the loans taken. They signed the applications and the receipts, which latter also
bore the signatures of the officers of the Bank in
token of the sanction of the loan. In our view, the
money payable by the appellants was payable under
these applications and receipts and was, therefore,
payable under written instruments or agreements. A
point was sought to be made that in each case there
were two documents, namely, the application by the
appellants and the receipt for the moneys advanced
signed by them, whereas a public demand as defined
in the Act, required one instrument. It is enough to
say in regard to this contention that the Act does not
say that the moneys shall be due .under a single
instrument. It is well-known that in a statute a singular includes the plural. In any case, the two documents constituted the written agreement between the
parties and that is enough to satisfy the requirement
of the Act, even if read in the way suggested by the
appellants.
The fourth point advanced was that the certificate
under the Act was defective and therefore the proceedings were a nullity. Section 4 of the Act requires
that the certificate shall be in the prescribed form.
z960
Shri Manna Lal
& Another
v.
C olleelo,, of
]halawar
cS- Others
Sarkar ].
970
SUPREME COURT REPORTS
(1961]
One of the particulars to be stated in the form, requires that the period for which the demand was due
should be specified. That period was not specified in
the certificate in the present case. It seems to us
however that this is no defect. In the case of loans
due, there is no question of any period for which the
demand is due. Obviously, the requirement as to the
specification of the period was meant to apply where
the demand consisted of a claim for revenue or rent or
the like, which could be due for a period. It is clear
to us that the requirement as to stating the period
for which the demand is due, as appears from the
prescribed form, does not arise in the case of a loan
due to the Government which is a public demand
within the Act and in such a case no question of
stating the period arises. The certificate was not,
therefore, defective.
The last point argued was that in so far as the Act
enables moneys due to the Government in respect of
its trading activities to be recovered by way of public
demand, it offends Art. 14 of the Constitution. It is
said that the Act makes a distinction between other
bankers and the Government as a banker, in respect
of the recovery of moneys due. It seems to us that
the Government, even as a banker, can be legitimately
put in a separate class. The dues of the Government
of a State are the dues of the entire people of the
State. This being the position, a law giving special
facility for the recovery of such dues cannot, in any
event, be said to offend Art. 14 of the Constitution.
We have now discussed all the points raised in this
appeal and are unable, for the reasons earlier mentioned, to find merit in any of them. In the result
we come to the conclusion that the amount claimed
from the appellants was a public demand within the
meaning of the Act and was legally recoverable by
the impugned proceedings. This appeal therefore
must be dismissed with costs and we order accordingly
Appeal dismissed.
,
'