FIRM BANSIDHAR PREMSUKHDAS vs STATE OF RAJASTHAN

The Supreme Court held that the contractual liability of a former State is binding on a succeeding sovereign State only if it recognizes that liability, as per the principles established in the case. The appellant's claim for customs duty concession was dismissed because the succeeding State of Rajasthan did not recognize the contractual right from the former State of Bharatpur. Furthermore, the enactment of the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949 superseded any previous contractual rights, as there was no express preservation of such rights in the Ordinance, thus upholding the levy of customs duty under Article 306 of the Constitution.