State Of Madras And Another vs K.M. Rajagopalan

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal NO.203 of 1954

Decision Date: 27 September, 1955

Coram: B. Jagannadhadas, Vivian Bose, Natwarlal H. Bhagwati, Bhuvneshwar P. Sinha, Syed Jaffer Imam

In this case the Court recorded that the respondent had been recruited to the Indian Civil Service by open competition in 1936 and had taken up duty in the Province of Madras in October 1937. From that time he had served the Government of Madras in a number of posts, his final appointment being Sub-Collector of Dindigal. He went on leave in June 1947. While on leave he received a letter from the Government of India asking whether he would be willing to continue in service after the contemplated transfer of power from the British Government to the Dominion of India on 16 August 1947. He replied that he was willing to continue. On 9 August 1947 he received a letter from the Government of Madras dated 7 August 1947 and signed by the Chief Secretary of that Government. The letter stated that it had been decided that his services would not be retained from and after 15 August 1947 and that his services would be terminated with effect from the afternoon of 14 August 1947. The respondent thereafter instituted a suit against the State of Madras and the Union of India seeking a declaration that the order issued by the Chief Secretary on 7 August 1947 purporting to terminate his services was null, void and inoperative and that he should be deemed to continue in service. The High Court granted the declaration, accepting the respondent’s contention that the order terminating his service violated the statutory guarantee relating to his service under section 240 of the Government of India Act, 1935, which remained in force until midnight of 14 August 1947. The Supreme Court held that the conferral of Independence on India brought about an automatic and legal termination of service on the date of Independence, following the precedents set in Reilly v. The King ([1934] A.C. 176) and Nokes v. Doncaster Amalgamated Collieries Ltd. ([1940] A.C. 1014). However, it also held that all persons previously holding civil posts in India are deemed to have been appointed and therefore to continue in service, except those governed by “general or special orders or arrangements” affecting their individual cases, as provided in Article 7(1) of the India (Provisional Constitution) Order, 1947.

The Court explained that the provisions of the India (Provisional Constitution) Order, 1947, read together with section 10(2)(a) of the Indian Independence Act and sections 240(2) and 247 of the Government of India Act, as adapted, formed the statutory framework for determining the status of civil servants at the moment of Independence. Under this framework, the guarantee of the conditions of service that existed prior to Independence and the statutory safeguards relating to disciplinary action continued to apply to those persons who were deemed to remain in service under the deeming provisions of the Order. However, that guarantee did not extend to persons who were not deemed to continue. The Court further observed that every individual who held a civil post in India before Independence possessed the right, and indeed was given the option, to decline to “continue in service” under the new constitutional regime. If any such person exercised that option, his service terminated on the date of the adoption of the Constitution. Simultaneously, the newly constituted Government retained the authority to refuse continuation of service to any officer, and any notice of such refusal, when given in advance, became effective from the moment the new Government assumed office on 16 August 1947. In the present case, the petitioner had been informed that his services would not be required after 14 August 1947; consequently, his service ceased on that date because the termination order fell within the category of a special order contemplated by Article 7(1) of the India (Provisional Constitution) Order, 1947. Accordingly, there was no legal basis for deeming his service to have continued beyond 14 August 1947. The Court referred to several authorities for support, including Lall’s case (1948) F.C.R. 44, West Band Central Gold Mining Co. Ltd. v. The King (1905) 2 K.B. 391, Virendra Singh v. The State of Uttar Pradesh (1955) 1 S.C.R. 415, Baj Bajendra Malojirao Shitole v. The State of Madhya Bharat (1954) S.C.R. 748, Ladore v. Bennett (1939) A.C. 468 and Govindan Sellappah Nayar Kodakan Pillai v. Punchi Banda Mudanayake (1953) A.C. 514.

In the judgment that followed, the Court recorded the formal details of the appeal. The appeal was listed as Civil Appeal No. 203 of 1954 and was filed by the State of Madras together with the Union of India against the judgment and decree of the Madras High Court dated 30 March 1954, which had been issued in Civil Suit No. 216 of 1952. The parties were represented by counsel: for the appellant, the Attorney-General of India and the Advocate-General of Madras, assisted by three additional counsel; for the respondent, counsel were instructed by a senior advocate. The judgment was dated 27 September 1955 and was delivered by Justice Jagannadhadas. The appeal arose from a suit brought by the respondent, who was a member of the Indian Civil Service, seeking a declaration that the order dated 7 August 1947, issued by the Chief Secretary of the Government of Madras and purporting to terminate his services effective from the afternoon of 14 August 1947, was null, void and inoperative, and that he should be deemed to continue as a member of the Indian Civil Service. The suit had been originally instituted in the High Court of Madras and, after an initial hearing before a single judge, had been referred to a bench of two judges because it raised an important constitutional question. The lower court had ruled in favour of the plaintiff and decreed the suit, leading to the present appeal by the State to this Court.

After a single judge recorded the evidence, the matter was transferred to a bench of two judges because an important constitutional question arose for consideration. The two-judge bench held in favour of the plaintiff, decreed the suit and consequently dismissed the appeal filed by the State of Madras. The plaintiff’s case was presented as short and straightforward. He had been recruited to the Indian Civil Service through an open competitive examination in 1936 and had taken up his first appointment in the then Province of Madras in October 1937. From that time he served the Government of Madras in a number of posts, the last of which was as Sub-Collector and Joint Magistrate at Dindigul. On 2 June 1947 he went on leave. While on leave he received a letter from the Government of India dated 19 June 1947 in which he was asked whether he was prepared to continue in the service after the contemplated transfer of power from the British Government to the Dominion of India on 15 August 1947. He replied affirmatively, stating his willingness to remain in service. However, on 9 August 1947 he received a communication from the Government of Madras dated 7 August 1947, signed by the Chief Secretary, which stated that the Government had decided not to retain him in service from and after 15 August 1947 and that his services would therefore be terminated effective on the afternoon of 14 August 1947. The communication also directed him to apply for an extension of the leave to which he was then entitled so that he could utilise the full period of leave credit. Upon receipt of the termination order the plaintiff made attempts to have it cancelled by meeting the Chief Secretary and the Chief Minister of Madras; those attempts were unsuccessful. During those meetings he was led to believe that, although the order bore the signature of the Chief Secretary, it had been issued under the sanction of the Secretary of State for India. That belief later proved to be unfounded. Acting on the mistaken impression, he accepted the situation, applied for the full period of leave, accepted the compensation awarded for the premature termination of his services, and began drawing his pension. Subsequently, a fellow civil servant, Shri Seshadri, who faced a similar problem and had instituted a comparable suit, informed him that documents produced in that suit indicated that the termination orders had been issued without the sanction of the Secretary of State for India. The plaintiff again brought the matter to the notice of the Government and made further efforts to have his order reversed, but those efforts also failed. He then proceeded to file an application for further relief.

The plaintiff filed a writ in the High Court on 7 November 1951 seeking to have the order that he claimed was illegal set aside. The High Court dismissed the writ, holding that a considerable lapse of time had occurred between the date of the questioned order and the filing of the petition. After the dismissal, the plaintiff gave the required notice to the Government under section 80 of the Civil Procedure Code and instituted a suit on 15 July 1952. In the plaint the plaintiff proposed to return the compensation that had been paid to him, subject to any adjustments necessary to satisfy his claim for salary for the period between his termination and the present.

The plaintiff’s case was founded on the argument that the termination order dated 7 August 1947 violated the statutory guarantee of his service contained in section 240 of the Government of India Act 1935, which remained in force until 14 August 1947 at midnight. He relied upon the authority of Lall’s case (1) in support of this contention. Both the State of Madras and the Union of India were impleaded as defendants, and the two governments advanced substantially identical defences.

The State of Madras set out its defence in paragraph 6 of its written statement, which read as follows: “This defendant states that on the transfer of power to the newly constituted Dominion of India in pursuance of the Indian Independence Act, as from the appointed day, viz. 15 August 1947, the tenure of the plaintiff’s service came to an end and he had no legal claim to continue in service thereafter. The plaintiff was holding office only during His Majesty’s pleasure. When His Majesty’s Government decided to transfer its power to the Dominion of India as from 15 August 1947, the career of the plaintiff under covenant with the Secretary of State terminated legally as of that date. Consequently, it is not correct to say that there was any termination by the Government of Madras nor that the order passed by that Government was void. It is further submitted that the alleged termination of the plaintiff’s services was only from 15 August 1947, and that on such date the Province of Madras, acting under instructions from the Government of India, was competent to decline to accept the plaintiff’s offer to continue in service” (1) [1948] F.C.R. 44.

In addition to the principal defence, the respondents raised minor pleas such as estoppel, which the Court deemed unnecessary to address at this stage. The High Court rejected the State’s defence, accepted the plaintiff’s claim, and granted the declaration that he had prayed for. Before the present Court, the learned Attorney-General, appearing for the State, contended that the plaintiff had misunderstood the legal position and that the events did not constitute a wilful order of termination of his services.

In this case, the Court examined whether the plaintiff’s termination of service fell within the operation of section 240 of the Government of India Act, 1935, and consequently whether the validity of that termination could be tested on that basis. The learned Attorney-General, appearing for the State, argued that the political changes effective from 15 August 1947 automatically terminated the services of all persons holding positions similar to that of the plaintiff. He asserted that, following those changes, the new Dominion Government of India or the various Provincial Governments were at liberty either to invite such persons to continue their employment or to inform them that their services were no longer required. In the present instance, the Government of Madras had, on 7 August 1947, given the plaintiff advance notice that his employment would cease as of 15 August 1947. The essential question for the Court, therefore, was whether the Attorney-General’s contention was correct.

The Court noted that the judgments of the High Court indicated an impression that the defence of automatic termination had been abandoned during the arguments before them by the Advocate-General of Madras. The Court found that impression to be erroneous and observed that there was nothing to prevent a purely legal question of this magnitude from being reconsidered, provided the Court’s permission was obtained, which it had granted. The Attorney-General based his contention that the services terminated automatically on three distinct grounds. First, he contended that the political change on 15 August 1947 created a new sovereign State of India, and that the creation of that sovereign State automatically terminated the pre-existing contracts of service that were entered into under the former Government. Second, he argued that the contract of service between the Secretary of State for India and the plaintiff terminated because the Secretary of State ceased to exercise control over the services contemplated in that contract. Third, he maintained that the statutory changes that came into force on 15 August 1947 themselves brought about termination of such services, and that the protection afforded by section 240 of the Government of India Act, 1935, was no longer available to a person in the plaintiff’s situation.

To appreciate these arguments, the Court found it necessary to trace the series of events leading to the political changes and the statutory measures by which they were effected, insofar as they related to the class of services that formed the subject of the present dispute. The starting point of those changes, the Court observed, was the announcement by His Majesty’s Government on 20 February 1947 that power would be transferred to Indian hands by June 1948 in accordance with the Cabinet Mission Plan of May 1946. From that announcement, the Government had been engaged in a series of steps designed to ensure a smooth transition of authority.

The Government was actively pursuing a series of measures intended to ensure that the transfer of authority to Indian hands would proceed as smoothly as possible. In connection with those measures, an important step relevant to the present dispute was the declaration issued by His Excellency the Viceroy on the thirtieth day of April, 1947. That declaration set out a policy for providing compensation to persons whose service would be terminated prematurely as a result of the transfer of power. The declaration specifically referred to members of the Civil Services who had been appointed by the Secretary of State for India, as well as to regular officers and British Warrant Officers serving in the Indian Naval and Military Forces. The Viceroy’s statement was organised in a series of numbered points. First, it affirmed that His Majesty’s Government had announced its intention that the British Government’s authority in India would be transferred to Indian hands by June 1948, and that the transfer should be carried out in an orderly and regulated manner so that the new authorities could assume their responsibilities under conditions that would serve the best interests of India and preserve good relations with Great Britain. Second, the announcement recognised that for those serving under covenants or other forms of agreement with the Secretary of State for India, or who held commissions from His Majesty the King, the transfer would amount to a premature termination of a career that had been conducted under the ultimate authority of the British Government and Parliament; consequently, many of those individuals faced the added burden of anxiety about their own futures and the welfare of those dependent upon them. Third, the declaration expressed the Government of India’s natural and justified concern that the administration should not be weakened by the loss of experienced officers, and it undertook that any members of the Secretary of State’s Services who chose to continue serving under the Government of India after the transfer would retain their existing terms of pay, leave, pension rights and disciplinary safeguards, with the intention that appropriate provisions would be incorporated into the Treaty to address matters arising from the transfer. The Government of India further indicated that it would invite the Provincial Governments to extend similar assurances to those members of the Secretary of State’s Service who agreed to join Provincial services.

The statement continued by acknowledging that some Indian members of the Secretary of State’s Services might be genuinely concerned about their prospects within the Provincial administrations where they were presently employed, and it pledged that every effort would be made to arrange suitable transfers for such cases. Fourth, the Government of India agreed that compensation should be payable to Indian officers of these services who met any of the following criteria: (i) they were not invited to continue serving under the Government of India after the transfer of power; (ii) they could demonstrate to the satisfaction of the Governor-General that their duties during the period preceding the transfer had damaged their future prospects, or that the appointments offered to them were unsatisfactory in the altered circumstances; or (iii) they could satisfy the Governor-General that they had a legitimate cause for anxiety about their future in the Province where they were now serving and that no suitable transfer could be arranged. Nevertheless, the Government of India maintained that a spirit of patriotism would naturally motivate Indian officers to continue serving their country, and, given the assurances already provided and the improved prospects anticipated for Indian members of the Service, it concluded that, apart from the special cases described, there was no basis for granting compensation to Indian officers solely on account of the transfer of power. Finally, the declaration noted that His Majesty’s Government was reviewing the entire situation, taking into account the undertaking given by the Government of India concerning those officers it desired to retain in service.

The Governor-General was told that officers could seek compensation only if they could demonstrate three specific situations. First, they had to show that actions taken while they performed their duties before the transfer of power had harmed their future prospects. Second, they needed to establish that the positions offered to them after the transfer were unsatisfactory given the changed circumstances. Third, they were required to convince the Governor-General that they had a genuine cause for anxiety about their future in the province where they were presently serving and that no appropriate transfer could be arranged for them. The Government of India, however, expressed the view that most Indian officers would feel a natural sense of patriotism that would motivate them to continue serving their country. It argued that, considering the commitment these officers had given and the expectation that their career prospects would actually improve, there was no justification for paying compensation to Indian officers because of the transfer of power, except in the special cases just described. His Majesty’s Government subsequently examined the entire situation. It noted the commitment made by the Government of India that certain officers were expected to remain in the service of the Indian Government. Recognising the strength of the Indian Government’s arguments, His Majesty’s Government concurred that compensation should not be permitted for Indian officers except in the three circumstances previously outlined. The Government further observed that many Indian members of the Secretary of State’s services would become members of provincial services. In those instances, His Majesty’s Government’s agreement that no compensation was required was conditioned upon the Provincial Governments guaranteeing that the officers would retain their existing service terms. The Government of India was warned that if the Provincial Governments were unwilling to provide such guarantees, His Majesty’s Government reserved the right to review the matter again. With these conditions stated, the authority of His Majesty’s Government authorized the communication to members of the Secretary of State’s services that they accepted the obligation to ensure that officers would be duly compensated for the termination of their careers resulting from the transfer of power.

After this announcement, His Majesty’s Government, for several political reasons, decided to bring forward the date of the transfer of power and issued a new declaration on 3 June 1947 outlining the steps it intended to take for an early transfer. Paragraph 20 of that declaration read as follows: “The major political parties have repeatedly emphasized their desire that there should be the earliest possible transfer of power in India. With this desire His Majesty’s Government are in full sympathy, and they are willing to anticipate the date of June 1948, for the handing over of power by the setting up of an independent Indian Government or Governments at an even earlier date. Accordingly, as the most expeditious, and indeed the only practicable way of meeting this desire, His Majesty’s Government propose to introduce legislation during the current session for the transfer of power this year on a Dominion Status basis to one or two successor authorities according to the decisions taken as a result of this announcement. This will be without prejudice…” The declaration indicated a willingness to accelerate the process and signaled the intention to pass legislation within the current session to achieve the transfer of power on a Dominion status, thereby allowing the newly formed Indian authorities to decide subsequently on their relationship with the British Commonwealth.

In the passage that follows, the Court explained that the British government had granted the Indian Constituent Assemblies the authority to determine, at a later date, whether the portion of India over which they exercised jurisdiction would continue to belong to the British Commonwealth. Acting on that indication, the Indian Independence Act was enacted on 18 July 1947. Under the authority conferred on the Governor-General by that Act, a series of legislative orders were subsequently issued by him. While the judgment will later set out the specific provisions of the Indian Independence Act and of several of those legislative orders, it was considered helpful at this point to describe the additional measures taken by the Government concerning the civil-service positions that are the subject of this dispute, measures that were undertaken in accordance with the plan announced on 3 June 1947 to accelerate the transfer of power. Within roughly two weeks after that announcement, the Government of India issued a circular to the Chief Secretaries of every provincial administration on 18 June 1947. The circular, in part, stated: “That in view of the latest announcement of His Majesty’s Government (dated the 3 June, 1947), it is essential to ascertain with the least possible delay the wishes of individual officers to whom His Excellency the Viceroy’s announcement of 30 April 1947 applies in regard to continuance in service after the transfer of power. This will enable Government to decide which officers they should continue to retain in service after the transfer of power and to make arrangements to replace officers who desire to quit service, of their own accord or whom Government may not wish to continue in service.” Accordingly, the Chief Secretaries were instructed to arrange the immediate dispatch of a copy of the enclosed letter from the Government of India to every officer employed in any service listed in the schedule and serving under the provincial government. Each officer was asked to respond within ten days of receiving the letter, indicating whether he wished to remain in the service of the Government or preferred to retire. The circular further directed the Chief Secretaries, when forwarding the officers’ replies, to inform any officer who elected to quit the earliest date on which the Government could release him, and to advise any officer who offered to continue in service that, for any reason, the provincial government might still refuse to retain him despite his desire to stay, noting that such refusal would create a liability on the part of the provincial government to pay compensation. Pursuant to these instructions, individual letters were evidently sent to the officers concerned, their responses were collected, and the requisite orders were issued with respect to each officer, including those whose governments were not prepared to retain them in service after the transfer of power.

The Court observed that after the Viceroy’s announcement on 30 April 1947 and the subsequent circular issued by the Government of India to the Chief Secretaries on 18 June 1947, as well as the individual letters sent on the same date to the officers concerned, the communications were all founded on three explicit assumptions. First, the transfer of power was understood to automatically bring about a premature termination of the services of the officers. Second, upon such termination each officer was considered free either to refuse to continue in the service of the new Government or to offer to remain in service. Third, where an officer expressed a desire to continue, the Government retained the discretion either to accept or to reject that offer. Consequently, continuation of service was envisioned only for those former servants who both expressed the wish to stay and whose offer was accepted by the Government. By contrast, termination of service could be effected by the choice of either party, and such termination would entitle the servant to compensation. Continuation, on the other hand, required the mutual consent of the individual servant and the Government concerned. The Court noted that this framework must have been fully understood by every recipient of the circulars, a point essentially admitted by the plaintiff in his testimony and evident from the fact that a copy of the Viceroy’s announcement dated 30 April 1947 was enclosed with the individual letters dated 18 June 1947 that were sent to each officer by the Government of India.

In support of this, the plaintiff’s own letter of 2 July 1947 to the Chief Secretary of the Government of Madras was quoted. In that letter the plaintiff wrote that he had received the memorandum dated 5 June 1947, which enclosed the Viceroy’s announcement, and he stated his desire to continue serving the Madras Government and his wish not to be transferred to any other province. (The reference to a 5 June date appears to be an error, since the plaintiff had clearly indicated his intention to continue in response to the letter of 18 June 1947.) To complete the narrative of the plaintiff’s individual case, the Court noted that after receiving the plaintiff’s reply of 2 July 1947, the Chief Secretary of the Government of Madras sent a further letter dated 7 August 1947, informing the plaintiff that the Government had decided not to retain him in service after 15 August 1947. The letter specified that his services would be terminated on the afternoon of 14 August 1947, that his present leave would be automatically converted into leave preparatory to retirement, and that he could apply for an extension of leave directly to the Government. The Accountant-General was instructed to certify the amount of leave to which the plaintiff was entitled, and a formal communication from the Government of India would shortly confirm the termination of his services effective 14 August 1947. The letter concluded with an expression of regret that the decision in the plaintiff’s case had been delayed for a long time.

On 7 August 1947 the Government of Madras sent a letter to the plaintiff. The letter stated that, in view of the plaintiff’s response to the earlier correspondence in which he had indicated his wish to remain in service after the transfer of power, the Government had decided not to retain him after 15 August 1947. The letter further informed him that his employment would cease on the afternoon of 14 August 1947 and that his existing leave would automatically be converted into leave preparatory to retirement effective from 15 August 1947. He was instructed to apply directly to the Government for any extension of leave to which he might be entitled, and the Accountant-General was asked to certify the amount of leave payable. The letter also mentioned that a formal communication from the Government of India would shortly be issued to terminate his services as of 14 August 1947, and expressed regret that the decision in his case had been delayed for a long time. The Court noted that this communication served as a prior notice that the plaintiff’s service would end at the exact moment the transfer of power took effect, namely at midnight between 14 and 15 August 1947. The reference to termination on the afternoon of 14 August was explained as conforming to the official practice, recorded in Audit Instruction (1) on page 163 of the Fundamental Rules, 3rd Edition, whereby an officer who hands over charge in the afternoon continues to draw salary for that day.

Following the 7 August letter, the Chief Secretary of the Government of Madras issued another letter dated 8 August 1947 addressed to the Under-Secretary of State for India at the India Office in London, with a copy sent to the plaintiff. That letter declared that Mr K. M. Rajagopalan, I.C.S., had gone on three months’ leave beginning on 3 June 1947 and, because he would not continue in the service of the Government of India after the transfer of power, he would be eligible for a compensation or settlement grant effective from 15 August 1947. On the same day, 8 August 1947, a formal Government Order numbered 377 was issued, containing identical wording: that Mr Rajagopalan, having taken three months’ leave from 3 June 1947, would not remain in the service of the Government of India after the transfer of power and therefore would be entitled to a compensation or resettlement grant as of 15 August 1947. This order was subsequently published in the Fort St. George Gazette on 19 August 1947. It is presumed that this order, together with similar orders, was also communicated to the Government of India, which then sent a telegram to the Government of Madras on 14 August 1947 referring to the services of Rajagopalan. Finally, on 29 September 1947 the Government of Madras issued another Government Order, the details of which are recorded in the proceeding.

In the earlier order the Court sanctioned a payment of four thousand five hundred pounds as compensation to the plaintiff and directed that the Accountant-General disburse that amount. The plaintiff subsequently drew the compensation in April 1950. Having set out this factual background, the Court turned to discuss the statutory framework that had produced the political transformation, especially the provisions that related to civil service positions. The instrument that effected the transfer of power from the British Government to the Dominion Government of India, in accordance with the announcements of His Majesty’s Government dated 20 February 1947 and 3 June 1947, was the Indian Independence Act of 1947 (10 & 1.1 Geo. VI, Chapter 30). This Act was passed by the British Parliament and became law on 18 July 1947. The preamble of the Act declared: “An Act to make provision for the setting up in India of two independent Dominions, to substitute other provisions for certain provisions of the Government of India Act, 1935, which apply outside those Dominions, and to provide for other matters consequential on or connected with the setting up of those Dominions.” Section I of the Act provided that two independent Dominions, namely India and Pakistan, would be established in India as of 15 August 1947, with the territories of each Dominion specified in sections 2, 3 and 4. Section 5 stipulated that each Dominion would have a Governor-General appointed by His Majesty, who would represent the Crown for the purposes of the Dominion’s government. Section 6 granted each Dominion’s Legislature full authority to enact laws for that Dominion, including laws with extraterritorial effect, and allowed such laws to remain valid even if they conflicted with English law or any existing or future Act of Parliament. Moreover, the Governor-General was empowered to give assent to those laws in the name of His Majesty, without any power of disallowance or reservation by the Crown. Section 7 expressly provided that, from 15 August 1947, the Government of His Majesty in the United Kingdom would bear no responsibility for the administration of any territories that had previously formed part of British India. Temporary arrangements for the governance of each Dominion, to operate from 15 August 1947 until each adopted its own independent Constitution, were set out in sections 8 and 9. Under section 8(1), the Constituent Assemblies of India and Pakistan, which had already been constituted and were engaged in drafting new Constitutions for their respective Dominions, were recognised as the interim legislative bodies, the Indian Assembly being established by virtue of the Cabinet…

The Court observed that the Mission Plan of May 1946 and, secondly, the announcement of His Majesty’s Government dated 3 June 1947 were recognised as interim Legislatures for each of the Dominions. It noted that, by section 8(2) of the Indian Independence Act, the pre-existing Government of India Act 1935 was to continue in force, subject to modifications and adaptations made by the Governor-General and any further provision or alteration that might be made by the Constituent Assembly when it functioned as the interim Legislature. The Court further explained that section 9 of the Act conferred on the Governor-General a wide range of powers to make provisions necessary to bring the Indian Independence Act into operation, to remove difficulties arising from the transition of power from the British Government to the Dominions, and to conduct the business of the Governor-General in Council during the interim period. It was specifically stated that the Governor-General’s authority in this regard was to operate retrospectively from 3 June 1947. The Court then pointed out that, by virtue of the Indian Independence Act, a completely independent Dominion of India was established, possessing a wholly independent Legislature and a fully independent Government free from any constraints imposed by the British Parliament or the British Government. Nevertheless, the Court observed that the Government of the Dominion continued to be exercised in the name of His Majesty the King of Great Britain, through a Governor-General of India appointed by His Majesty. The learned Attorney-General vigorously contended that these constitutional changes resulted in the emergence of India as an independent sovereign State and that, on well-recognised principles of international law, this automatically terminated the service contracts that had existed between the former Government and its servants. In support of this principle, the Attorney-General cited several authorities, including the case West Rand Central Gold Mining Co. Ltd. v. The King, which had been quoted by this Court in Virendra Singh v. The State of Uttar Pradesh. On the other side, counsel for the respondent stressed that, however independent the new Dominion Government might be in terms of the operation of its Legislature and executive, it still functioned in the name of His Majesty the King of Great Britain and therefore did not occupy the same position as a sovereign State that acquires sovereignty by conquest or cession. He argued that the principle of international law relied upon by the Attorney-General would not apply to this situation. To support his submission, he referred to various other provisions of the Indian Independence Act, to the legislative orders issued by the Governor-General under the powers granted by section 9 of the Act, and to the adaptations made with respect to several existing laws, raising the question of whether…

In this case the Court observed that the question of whether the Indian Independence Act had created a fully sovereign State for every purpose was of great importance and was not free from difficulty, and the Court expressly stated that it would not decide that issue at this stage. The Court held that the matter before it had to be decided by examining what exactly had been brought about by the Indian Independence Act and the subsidiary legislation that followed, insofar as those statutes affected the tenure of persons occupying the position of the plaintiff. For that purpose the Court found it necessary first to determine clearly what the plaintiff’s term of service had been before 15 August 1947. The Court noted that persons in the plaintiff’s position had been recruited directly by the Secretary of State for India by virtue of the powers conferred on that officer under section 244(1) of the Government of India Act, 1935, or under the corresponding provisions in earlier Government of India Acts. Those recruited individuals were appointed to the Indian Civil Service. Each recruit was required to enter into a covenant in the form of an indenture executed between the individual and the Secretary of State. The Court explained that the indenture, the form of which could be found as Appendix I of the Indian Civil Service Manual, declared that the individual was appointed by the Secretary of State to serve His Majesty as a Member of the Civil Service of India and that such service would continue at the pleasure of His Majesty. The indenture further provided that the appointment would be signified by the signature of the Secretary of State for India and that the covenanter could resign only with prior permission of the Secretary of State or of the Government under which he was then serving. The Court listed the various covenants incorporated in the indenture, namely the duty of general fidelity, obedience to orders of a general nature, maintenance of regular accounts and the proper preservation, delivery and production of private accounts, prohibition against misapplying or using for improper purposes any property entrusted to his charge, a duty not to divulge secrets, a prohibition on accepting corrupt presents or entering into corrupt bargains, a prohibition on trading contrary to law or regulations, a prohibition on leaving India without leave and an obligation to settle all debts due to His Majesty before departure, and the requirement to make prescribed pension payments, among others. In addition to these contractual obligations, the Court noted that the plaintiff’s tenure was governed by a number of statutory provisions contained in the Government of India Act. Specifically, Section 240 affirmed that the service was at the pleasure of His Majesty but required that any dismissal or reduction in rank be preceded by a reasonable opportunity to show cause against the proposed action, and that dismissal or removal from service could be effected only…

The Court noted that, under the relevant statutory scheme, dismissal or removal of the appellant could be effected only by an authority that was not subordinate to the appointing authority; in the present case that authority was the Secretary of State. The Government of India Act also contained a number of provisions that applied specifically to a person recruited by the Secretary of State. According to those provisions, the conditions of his service with respect to pay, leave, pension and other matters were to be determined by rules made by the Secretary of State. In the absence of any such specific rules made by the Secretary of State, the same matters were to be governed by rules made by the Governor-General or by the Governor of a Province, as the case might be, acting in accordance with the fact that the officer was in service under the Government of India or the Provincial Government, see section 247(1). In matters relating to promotion or to leave exceeding three months, or in the case of an order of suspension, the officer was to be placed directly under the authority of the Governor-General or the Governor, as appropriate, who would exercise his or her individual judgment, see sections 247(2) and 247(3). No pension award lower than the maximum pension stipulated by the rules could be made without the consent of the Secretary of State, see section 247(6). The officer also possessed the right to approach the Governor-General or the Governor in the exercise of their individual judgment whenever he had any grievance or complaint concerning his service, and he retained a right of appeal to the Secretary of State against any order of any authority that punished him, formally censured him, or interpreted any rule to his disadvantage, see section 248. The Secretary of State was required to make rules specifying the number and character of the civil posts under the Crown that were to be reserved for and filled by persons belonging to the Indian Civil Service recruited by him, see section 246. If the conditions of service were adversely affected for any reason arising under the Act or for any other reason that might, in the view of the Secretary of State, justify payment of compensation, the officer was entitled to such compensation as the Secretary of State might fix, and that sum was payable out of the revenues of the Government of India or the Provincial Government, as the case may be, see section 249. From the foregoing, the Court observed that the tenure of an Indian Civil Servant was essentially contractual, but the conditions and prospects of that service were regulated by statute. A person recruited to such service occupied a very special position in comparison with persons holding other civil posts of the Government of India or a Provincial Government. He enjoyed a number of rights and privileges by virtue of his belonging to a specially recruited service that reserved certain high posts for him and gave him the right of appeal to the Secretary of State in matters relating to his service.

The judgment observed that the Indian Civil Service derived its special status from sections 244, 246, 247, 248 and 249 of the Government of India Act, 1935, and that this service was a privileged class under the Crown, enjoying the direct and ultimate protection of the Secretary of State who represented His Majesty’s Government. The Court then turned to the substantial alterations introduced by the Indian Independence Act of 1947. It noted that, at the outset, the Secretary of State – who had been a member of the British Cabinet, acted in the name of the Crown and was accountable to the British Parliament, and who exercised the powers conferred upon him concerning Indian affairs and, in particular, the civil services – ceased to exist as a constitutional authority after independence. Section 7(1)(a) of the Indian Independence Act, 1947 expressly provided that, from the appointed day of 15 August 1947, “His Majesty’s Government in the United Kingdom have no responsibility as respects the government of any of the territories which, immediately before that day, were included in British India.” The Act further contained a specific provision, section 10, dealing with the services of the Secretary of State. Section 10(1) declared that the provisions of the Act which kept in force certain sections of the Government of India Act, 1935, would no longer apply to the provisions relating to appointments to the civil services or civil posts under the Crown in India by the Secretary of State, nor to the provisions relating to the reservation of posts. Subsequently, the India (Provisional Constitution) Order, 1947, issued by the Governor-General on 14 August 1947 under the power of adaptation conferred by section 9(1)(c) of the Indian Independence Act, came into operation at the same time as the Act. That Order gave effect to the two aforementioned provisions – section 7(1)(a) and section 10(1) – by expressly deleting from the Government of India Act, 1935, the sections that related to the Secretary of State and his services, namely sections 244, 246, 248, 249 and sections 278 to 284-A, as listed in the Schedule to the India (Provisional Constitution) Order, 1947. The same Order also amended sections 240 and 247 concerning conditions of service, with the primary purpose of withdrawing the Secretary of State’s responsibility for matters covered by those sections. As a result, the Court identified four clear consequences: first, there would be no further recruitment to a special covenanted service by the Secretary of State; second, the Secretary of State would no longer make any statutory reservation of posts; third, the conditions of service that had been established by the Secretary of State ceased to be operative; and fourth, the right of appeal or approach to the Secretary of State for redress of personal grievances or claims for compensation no longer existed.

The Court observed that there was no longer any right for a civil servant to lodge personal grievances with the Secretary of State, nor any entitlement to compensation for any adverse action that might have been determined by that officer. It recognized that, although some of the service conditions that had previously applied to these individuals were preserved by section 10(2) of the Indian Independence Act and by the adaptations made under that provision, the question of whether such preservation extended to every former member of the service would be examined later. The Court stressed that, irrespective of the partial continuation of service conditions, the ultimate authority for formulating and maintaining those conditions no longer rested with the Secretary of State. The Court further noted that, concerning those civil servants whose employment was retained by the new Dominion Government, the service technically remained “under the Crown” because section 240 of the Government of India Act had been adapted to reflect that circumstance. However, this arrangement existed only on the theory that the newly constituted Government of India would continue to act in the name of His Majesty, serving merely as a symbolic expression of allegiance to the Crown. In substance, the Court explained, the situation had changed dramatically: earlier the Secretary of State’s employees were subject to Crown authority in the sense that ultimate responsibility lay with the British Parliament and the British Government, but that authority and responsibility ceased to exist after 15 August 1947, as envisaged in the Viceroy’s announcement of 30 April 1947 and expressly affirmed by section 7(1)(a) of the Indian Independence Act.

The Court went on to state that the essential structure of the Secretary of State’s services was thereby altered, and the foundational basis of the contractual and statutory tenure of those services disappeared. Consequently, the contracts and the statutory protections that had been attached to them terminated automatically and legally, a conclusion that the Court supported by referring to the decisions of the Privy Council and the House of Lords in analogous cases such as Reilly v. The King and Nokes v. Doncaster Amalgamated Collieries Ltd. In response to this view, counsel for the respondent attempted to rely on other statutory provisions. The Court examined the first of those provisions, namely section 10(2) of the Indian Independence Act, and reproduced its wording: “10. (2) Every person who—(a) having been appointed by the Secretary of State, or Secretary of State in Council, to a civil service of the Crown-in-India, continues on and after the appointed day to serve under the Government of either of the new Dominions or of any Province or part thereof, shall be entitled to receive from the Governments of the Dominions and Provinces or parts which he is from time to time serving the same conditions of service as respects remuneration, leave and pension, and the same rights as…” The Court concluded that, far from supporting the respondent’s contention, the language of this provision actually affirmed the analysis set out above.

The counsel for the respondent argued that the provision in section 10(2) of the Indian Independence Act plainly states that individuals who had been appointed by the Secretary of State to the Indian Civil Service were to remain in service under the new Government and were therefore entitled to the same conditions of service that they previously enjoyed. On that basis, the counsel submitted that the order terminating the plaintiff’s service was invalid and that the plaintiff should be considered to have continued in service. However, the Court observed that the wording of the provision does not declare that every person previously appointed shall automatically continue in service. The provision is carefully drafted and only guarantees the same conditions of service, leave, pension, disciplinary matters and, where appropriate, the tenure of office or similar rights, to those who “having been appointed by the Secretary of State continue on and after the appointed day to serve under the Government.” The provision itself does not identify which persons are to continue in service and receive the benefit. That determination was left to delegated legislation issued by the Governor-General under section 9(1)(a) of the Indian Independence Act. The India (Provisional Constitution) Order, 1947, addressed this issue in article 7(1), which reads: “Subject to any general or special orders or arrangements affecting his case, any person who immediately before the appointed day is holding any civil post under the Crown in connection with the affairs of the Governor-General or Governor-General in Council or of a Province other than Bengal or the Punjab shall, as from that day, be deemed to have been duly appointed to the corresponding post under the Crown in connection with the affairs of the Dominion of India or as the case may be, of the Province.” The Schedule to that Order also shows the adaptations made to sections 240 and 247 of the Government of India Act to give effect to section 10(2) of the Independence Act. The adapted section 247 now provides: “The conditions of service of all persons who, having been appointed by the Secretary of State or the Secretary of State in Council to a civil service of the Crown in India, continue on and after the date of the establishment of the Dominion to serve under the Government of the Dominion or of any Province, shall—(a) as respects persons serving in connection with the affairs of the Dominion, be such as may be prescribed by rules made by the Governor-General; (b) as respects persons serving in connection with the affairs of a Province—(i) in regard to their pay, leave, pension, general rights as medical attendance and any other matter which immediately before the establishment of the Dominion was regulated by rules made by the Secretary of State, be such”.

The adapted provision in section 247 states that the conditions of service for persons who were appointed by the Secretary of State or the Secretary of State in Council and who continue to serve after the establishment of the Dominion shall be determined as follows: for individuals serving in connection with the affairs of the Dominion, their conditions shall be prescribed by rules made by the Governor-General; and for those serving in connection with the affairs of a Province, their conditions relating to pay, leave, pension, medical attendance and any other matters previously regulated by the Secretary of State shall be prescribed by rules made by the Governor-General, while any other matters shall be prescribed by rules made by the Governor of the Province.

Section 240(2), as modified, provides that no person described in section 240(1)—including those appointed by the Secretary of State—who continues after the establishment of the Dominion to serve under the Crown in India may be dismissed from His Majesty’s service by any authority subordinate to the Governor-General or the Governor, depending on whether the person is serving in connection with the affairs of the Dominion or a Province. Furthermore, no such person may be dismissed by any authority subordinate to the authority that originally appointed him.

When these provisions are read together, it becomes clear that the guarantee of the prior conditions of service and the statutory safeguards concerning disciplinary action are limited to those individuals who remain in service on and after the establishment of the Dominion and who thus serve under the Government of the Dominion or under a Province, as appropriate. The identity of the persons falling within this category is indicated by the implication contained in article 7(1) of the India (Provisional Constitution) Order, 1947. That article provides that any person who, immediately before the appointed day, holds a civil post under the Crown connected with the affairs of the Governor-General, the Governor-General in Council, or a Province shall, from that day, be deemed to have been duly appointed to the corresponding post under the Crown in connection with the affairs of the Dominion of India or, as the case may be, the Province.

The continuance contemplated by section 10(2)(a) of the Indian Independence Act and by the adapted sections 240(2) and 247 of the Government of India Act is precisely the continuance brought about by the deeming provision of article 7(1). However, this provision is expressly qualified by the phrase “subject to any general or special orders or arrangements affecting his case.” Consequently, all persons who previously held civil posts are deemed to have been appointed and to continue in service, except those whose cases are governed by such general or special orders or arrangements. In the present circumstance, “general orders” have no relevance, and there is no doubt that the “special orders or arrangements” referred to are those issued following the Viceroy’s announcement of 30 April 1947, which set out the options for civil servants and led to the exclusion of certain individuals from continued service.

The individual civil servants had been sent a circular and their preferences had been recorded, after which the respective governments had finally communicated their decision not to invite the continuation of service of certain persons, which is precisely what occurred in the case of the present plaintiff. In order to reject this conclusion, counsel for the respondent advanced two principal arguments. Firstly, the counsel asserted that the phrase “special orders or arrangements” referred to in article 7(1) of the India (Provisional Constitution) Order, 1947, must denote either a valid order or a bilateral valid arrangement made by the appropriate authority, and that, in the counsel’s view, the order terminating the plaintiff-respondent’s service—issued by the Chief Secretary to the Government of Madras on 8th August 1947—did not fall within that category. Secondly, the counsel contended that the earlier history beginning with the Viceroy’s announcement could not be used to interpret the meaning and effect of the Indian Independence Act or the legislative orders made by the Governor-General under it. With respect to the first objection, there is no reason to accept that the words “special orders or arrangements” necessarily imply a formally valid order or a bilateral arrangement. Considering the background described above and the extreme urgency with which all such steps had to be taken before the appointed day in order to ensure a smooth transition, the legislative authorities must be understood to have acted on the factual situation that then existed. A comparable approach was adopted in Raj Rajendra Malojirao Shitole v. The State of Madhya Bharat, where this Court held that article 385 of the Constitution was applied on the basis of the factual circumstances prevailing at the relevant time. Moreover, the objection appears to be founded on a misapprehension. It is true that there is no clear evidence in the cited case that the order terminating the plaintiff’s service was made with the sanction of the then Secretary of State. It may also be that the decision not to retain his services, effective from 15th August 1947, was influenced by his past record as admitted in his written statement and that the decision caused serious hardship because he was not afforded an opportunity to show cause. Nevertheless, the order was intended to take effect at the exact moment when the Indian Independence Act came into force, and at that moment the Secretary of State’s concern with the matter ceased. Consequently, there is no reason to think that an order of this nature, issued with the sanction of the Central Government, not claiming to exercise a power of termination of services but acting upon the assumption implicit in the Viceroy’s announcement that the services would automatically terminate, and thereby notifying the appropriate Government’s decision not to retain the plaintiff’s services from 15th August 1947, falls outside the scope of the special orders contemplated by article 7(1).

The Court observed that the authority to make the anticipatory decision and to communicate it to the plaintiff lay outside the competence of the Government under which the plaintiff sought to remain in service. It explained that the very nature of the circumstances required such forward-looking decisions to be taken and conveyed to the individual so that they would become effective at the critical moment of the transfer of power. Regarding the second objection, the Court found that the argument that reference to the Viceroy’s announcement and the subsequent actions of the Central and Provincial Governments were inadmissible, whether generally or in relation to the plaintiff’s case, lacked any substance. The Court explained that the expression “special orders or arrangements affecting his case” in article 7(1) of the India (Provisional Constitution) Order, 1947, could only refer to this and similar material that culminated in the orders and arrangements concerning the individuals concerned. The Court noted that no other kind of special order or arrangement concerning the Secretary of State’s services had been suggested, and it was clear that none existed. The Court then referred to the precedent that such preceding material leading to the specific legislative provision was admissible as evidence, citing Ladore v. Bennett(1) and confirming its validity in Govindan Sellappah Nayar Kodakan Pillai v. Punchi Banda Mudanayake(2). It further quoted Lord Atkin’s observation in Ladore v. Bennett(3) at page 477, stating that those documents indicated the material that would have been before the Governor-General when he enacted the relevant legislative order. From that material, the Court inferred that although the initial option to continue service lay with the servant, the decisive authority to retain or terminate the servant lay with the appropriate Government, and that the “special orders or arrangements” contemplated were the actions taken pursuant to that final authority. The Court rejected the suggestion that the Viceroy’s 30 April 1947 announcement was rendered inadmissible because it preceded His Majesty’s Government’s decision to advance the transfer of power by nearly a year and because the original announcement had envisaged a treaty between the British Government and the future Dominion Government which never materialised. The Court held that the fact that the transfer of power occurred through British parliamentary legislation rather than a conventional treaty did not affect the relevance of the announcement to the matter at hand. It emphasized that the announcement had been acted upon after the subsequent announcement of 3 June 1947, as shown by the circular sent by the Government of India to the provincial Chief Secretaries, which referred expressly to the Viceroy’s announcement, and by the accompanying letter dispatched to each individual civil servant which included a copy of that announcement.

The circular that was sent to each individual civil servant included a copy of the announcement mentioned earlier. Consequently, from the discussion above it follows that, notwithstanding the observation that the Secretary of State—referenced in the decisions reported in [1939] A.C. 468 and in [1953] A.C. 514, 528—ceased to hold office on 15 August 1947, both section 10(2) of the Indian Independence Act and article 7(1) of the India (Provisional Constitution) Order of 1947 were applied in a manner that unmistakably recognised the validity of the various special orders and the personal arrangements that had been made. Those provisions therefore operate as an implicit statutory acknowledgement of the principle that the civil service appointments terminated automatically as a result of the political transformation. In the Court’s view, the plaintiff’s employment therefore terminated automatically at the moment when India became a Dominion. The special order and arrangement that had been issued with reference to the Viceroy’s announcement led to the plaintiff’s service not being continued after 15 August 1947, and accordingly the plaintiff is not entitled to the declaration that he sought. The High Court judges, in reaching their decision, failed, with due respect, to appreciate the significance of the expression “special orders or arrangements affecting his case” contained in article 7(1) of the India (Provisional Constitution) Order, 1947. They also neglected to interpret that expression in the context of all the relevant events that followed the Viceroy’s announcement dated 30 April 1947. For those reasons, the Court allowed the appeal, but ordered that no costs be awarded.