Decided on February 11,1960

K.G.KALWANI Appellant
UNION OF INDIA Respondents


Bose, J. - (1.) This is an appeal from a judgment and decree of G. K. Mitter, J., dismissing the plaintiffs suit for recovery of a sum of Rs. 25,547/6/- as compensation for non-delivery of certain goods entrusted to the then East Indian Railway, which was a State Railway. It appears that the appellant, which is a partnership firm and carries on business at 59. Cross Street, Calcutta and also at Chandari and Kanpur, delivered to the then East Indian Railway on 26th February, 1949 a consignment of artificial silk goods for carriage from Chandari Station to Howrah Station both on the East Indian Railway. The East Indian Railway at all material times had its head office at No. 17 Netaji Subhas Road, Calcutta. As the goods were not delivered to the appellant the Tatter after giving notice under Section 77 of the Indian Railways Act and Section 80 of the Code of Civil Procedure filed a suit in this Court on 14th July, 1950. No leave under Clause 12 of the Letters Patent was however, obtained before institution of the suit. The learned trial Judge has dismissed the suit on the preliminary ground that this court has no Jurisdiction to entertain the suit.
(2.) The only question which arises for determination in this appeal is whether this court has jurisdiction under Clause 12 of the Letters Patent to entertain the suit solely on the ground that the Union of India, as owner of the Railway, can be said to be carrying on business at the Head Office of the Railway which, it has already been stated, is at 17, Netaji Subhas Road, Calcutta, which is within the ordinary original civil jurisdiction of this Court. This question has been the subject of determination in various cases decided by the different High Courts. Mr. I. P. Mukherjee, the learned counsel for the appellant, has taken us through a large number of decisions to persuade us to hold that the view previously expressed by this Court, to the effect that the government by carrying on an undertaking like the Railway cannot be said to be carrying on business within the meaning of Section 20 of the Code of Civil Procedure or Clause 12 of the Letters Patent, is not correct and requires modification due to a change in the conception of the State brought about by the Constitution of India, which envisages a welfare State, The cases cited by the learned counsel are Shiels v. Great-Northern RIy., Co. Ltd., (1861) 30 LJQB 331; Brown v. London and North Western Ry. Co., (1863) 122 ER 481, Subbaraya Mudali v. Government, 1 Mad HCR 286 at p. 291; Rundle v. Secy. of State, 1 Hyde 37 at pp. 40-41; Biprodas Dey v. Secy, of State, ILR 14 Cal 262 (FN); Doyanarayan Tewari v. Secy, of State, ILR 14 Cal 256 at pp. 272-273; Rodricks v. Secy, of State, ILR 40 Cal 308; Govinda Rajalu Naidu v. Secy, of State, ILR 50 Mad 449: (AIR 1927 Mad 689); R. J. Wyllie and Co. v. Secy, of State, AIR 1930 Lah 818; Golabrai Paliram v. Secy, of State, ILR (1941) 2 Cal 160; Dominion of India v. Jagadish Prosad, 84 Cal LJ 175: (AIR 1949 Cal 622); Nilima Sarkar v. Governor General in Council, 86 Cal LJ 98; Dominion of India v. Nath and Co., Khulna; Nagi Bros. v. Dominion of India, AIR 1951 Punj 92; Calcutta Motor Cycle Co. v. Union of India; Bata Shoe Co. Ltd. v. Union of India; Lakshmi Chand v. State of Punjab; Azizuddin and Co. v. Union of India, (S); Corporation of Calcutta v. Director of Rationing and Distribution, (S); Achut Anant Pai v. Governor General in Council, (S); P. C. Biswas v. Union of India, AIR 1956 Assam 85; Bhuramal Champalal v. Union of India, 1958-1 Cal LJ 67 and Trilok Chand Agarwall v. Dominion of India.
(3.) In the case , my learned brother exhaustively dealt with the' relevant cases on the point and after considering the question from all conceivable angles recorded the following conclusion at p. 48 of that report (Cal LJ): (at p. 9 of AIR): "By carrying on a business the State itself does not become a business concern. By carrying on an undertaking like the railways the State itself does not become a railway corporation. The State is not an arithmetical or mechanical conglomeration of functions so that by undertaking a venture of commercial nature it is to be regarded as a commercial institution. I cannot persuade myself to accept the idea that the State in India is to be regarded as a trading Corporation. It is quite true that one of its functions or even one of its duties in the welfare State might be to carry on an undertaking which formerly at any rate could only have been a private commercial enterprise. But does that mean that the State ''carries on business" within the meaning and intention of Clause 12 of the Letters Patent? I have given my most anxious and careful consideration to the problem and I have come to this conclusion that this is not what was intended by Clause 12 of the Letters Patent.";

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