HC Deb 28 March 1935 vol 299 cc2163-76

7.44 p.m.


I beg to move, in page 86, line 12, to leave out Sub-section (2).

This Clause is one of the most complex in the Bill and I must confess that it is very difficult to understand exactly what is contemplated by its several provisions. Sub-section (2), which the Amendment proposes to leave out, provides: Subject as aforesaid"— which appears to refer to the provisions of Sub-section (3)— where any territories have been voluntarily ceded to the Crown by a Federated State before the passing of this Act in return for specific military guarantees, there shall be paid to that State, if His Majesty, in signifying his acceptance of the Instrument of Accession of that State, so directs, such sums as in the opinion of His Majesty ought to be paid in respect of any such cession as aforesaid. One does not know whether the military guarantees are to continue in any case, or are to be discontinued or in what circumstances these contributions in respect of territories which have been voluntarily ceded to the Crown are to be paid back to the Federated States or what portion is to be paid back. That is the particular point upon which this question is raised. There are many other points of doubt in this Clause, and in several cases it is very difficult to know what is intended. For instance, there is the case of the liability for a cash contribution which has been discharged by the payment of a capital sum. That is another point which is left entirely permissive. There appears to be no particular reason why His Majesty may agree that the capital sum or sums so paid shall be repaid either by instalments or otherwise, and such repayments shall be deemed to be remissions for the purposes of this section. It is difficult to understand why at this moment it should be proposed to remit, in some cases a large part and in others a part, by instalments, what are called contributions, which are really tributes given as a mark of fealty from the Princes to the suzerain Power.


I think the hon. Member's argument would be better directed to the question of the Clause standing part. We are now dealing solely with the point, where territories have been voluntarily ceded, whether there should or should not be paid such sums as His Majesty may direct.


But as military guarantees are presumably in some cases to be continued, it certainly seems desirable that the Government should explain what are the cases in point, and whether they are all based on the same principle, namely, whether the military guarantees are continued notwithstanding the remission of sums hitherto paid, or whether those military guarantees are now considered to have lapsed. It is impossible for anybody reading this Clause to understand it. It may be cleared up in the very complicated report of the Indian States Inquiry Committee, but this Clause does not give any clear idea as to what principal sums may be remitted and what really is the consideration for these remissions.

7.50 p.m.

The CHANCELLOR of the DUCHY of LANCASTER (Mr. J. C. Davidson)

My hon. Friend asked what was the position with regard to ceded territories. Territories are ceded in the main for military guarantees, and when we investigated the position during the visit of the Indian States Inquiry Committee to India, it was quite clear that cash contributions, or in other words tributes, and ceded territories in many cases had a common origin. Therefore, you could not treat cash contributions in one way and ceded territories in another, because in some cases the Indian States having entered into an arrangement by which they were to pay an annual contribution, the contribution had fallen into arrears, and in place of it a territory had been ceded which yielded a revenue equal to the contribution which the State had undertaken to pay. That is why it is essential, I think, to treat a ceded territory in the same way as it is proposed in the Bill to treat a cash contribution.

So far as the capitalised cash contributions are concerned, under Sub-section (4), to which my hon. Friend also referred, in some cases the Indian States, instead of undertaking to pay an annual sum, paid a lump sum down, and obviously, however long ago that was done, the fact remains that they are in the same position from the point of view of the payment of a cash contribution as those who elected to pay an annual sum. If hon. Members will look at page 191, Appendix III, Schedule A, of the most complicated report, as I agree it is, of the Indian States Inquiry Committee, they will find one example, that of Indore, where a cash contribution was paid as a lump sum in a capitalised form. So much for that. The real explanation of Sub-section (2) and the reason why the Government cannot accept the Amendment to leave it out is, as I have said, that where the States ceded territories in return for military guarantees and those guarantees are waived, then some compensation, in the opinion of the Government, should be payable to the States.

7.53 p.m.


Can the hon. Gentleman amplify his reply? I understand that certain military guarantees have been waived, and I should like to know what those military guarantees are. Do not the whole defence of India and the whole safety of the country depend on law and order being maintained in these States as much as in the Provinces of British India, and if we waive our rights in these matters, will not that endanger the position of the States? I should like to ask also whether this Sub-section has any connection with the scene when my right hon. Friend the Member for Epping (Mr. Churchill) was giving his evidence before the Joint Select Committee, when I think it was the Prime Minister of the State of Bikanir explained that if the States did not come into Federation, they would not get any of this money which they were hoping to get, a statement which left a nasty taste in one's mouth, because it seemed as if there was some cash consideration being handed over to the States to induce them to come into Federation. There was a lot of explanation at the time, but we want it made clear that this Subsection has nothing to do with that matter, and we want to know exactly what the military guarantees are that we propose to waive and what considerations are to be given to the States instead of those guarantees. In another part of the Joint Select Committee's report we learn that something like £750,000 is to be given to the States. Will that be included in this Sub-section or not?

7.57 p.m.


It is very difficult to answer in detail on such a complicated subject as this without possibly misleading the Committee by not covering the whole field, but let me take one example. It was understood when I was in India, and it has been understood since then, that the State of Hyderabad has waived the question of the ceded territory because that State does not want to do without the guarantee under its Treaty for military protection. It may be possible that other States will say, "We are prepared to undertake the maintenance of law and order in our own State, and we will therefore not require that certain British units shall be maintained within a certain distance of the State," because of developments in their own States since the days when a treaty was made. If that be the case, the State can elect to negotiate some compensation for the territories which it surrendered on the ground that she has surrendered the requirement on her part of military guarantees on the part of the Government. That is the position so far as the ceded territories and military guarantees are concerned.

May I reassure my hon. and gallant Friend at once, with regard to the suggestion which was put forward when the right hon. Member for Epping (Mr. Churchill) was giving his evidence, that in some shape or form the proposals which have now found their way into this Clause were a bribe to the Indian States to come in? Nothing could be further from the truth, and I should have thought that my hon. and gallant Friend and those who are associated with him would have found it very difficult, in view of the attitude they have adopted, to find any evidence that there has been bribery on the part of His Majesty's Government to bring in the States, because apparently they have, or at least my hon. and gallant Friend has, come to the conclusion that the States have decided not to come into the Federation. Therefore, at any rate, even if it were true, which it is not, that these proposals were intended to be in the nature of an inducement—which is very far from the fact—they apparently have been completely unavailing, according to the views expressed by the hon. and gallant Member and his friends.

In point of fact, the report of the Indian States Inquiry Committee, whose recommendations were never questioned, either at the Round Table Conference or in the Joint Select Committee, and have been accepted in principle by the Government and have found their way into this Bill, was made solely on the basis of Federation, and no recommendations in the report and no recommendations which the Committee made were applicable to any State except on the assumption—


I think we are going rather beyond the Subsection.


I bow to your Ruling at once, but it is rather difficult to give the hon. and gallant Member an answer to his question without going a little wide. I can give him a definite assurance that there is not one word of truth in any suggestion that the proposals in this Bill are in any way a bribe to induce the States to enter federation.

8.1 p.m.


I find it difficult to understand the case for this Amendment. These territories, taking the phraseology of the Sub-section as it stands, have been voluntarily ceded to the Crown. That is a transaction on one side. As a quid pro quo there are ex-pressedly military guarantees given. That is the other side of the balance sheet, so to speak. On the top of that there comes in a payment of some sort. I am afraid I must have missed it in the speech of the right hon. Gentleman, but I still do not see what is the case for the payment of this extra sum, seeing that the balance has been struck—the territory ceded in return for military guarantees.

8.2 p.m.


Perhaps I did not make myself clear, but in the Clause to which the hon. Gentleman is referring, the States cede certain territories in return for specific, defined and detailed provisions for certain military support for instance of so many regiments of infantry, cavalry and so forth. They were all specific and we felt that if a specific guarantee on the one side was waived and disappeared, it was only right that some compensation should be paid, because the purpose for which these territories was ceded had disappeared. Retrocession being out of the question, we felt that some compensation was payable to the State which had suffered loss of revenue for the maintenance of a force no longer to be maintained.

8.4 p.m.


I understand that the provision really is that you have evalued in terms of cash the specific military guarantees and that the sums of money which you are discussing in the Sub-section are the equivalent of that evaluation of the amount of the specific military guarantees. It is in lieu of, and not in addition to?




Thanks very much. I am much obliged.

8.5 p.m.


There is one point on which the Committee would like to be specific, and that is that the exact sums to be paid in lieu of military guarantees for ceded territories should be clearly specified before there is any argument about the ruler of a State coming in, otherwise there would be a suspicion that there might be some form of bargaining taking place. As far as I can see in reading the Clause it simply says that such sum shall be paid by His Majesty to the ruler of a State on signifying his acceptance of the Instrument of Accession. We are not told that any specified sum is to be paid. It is some unspecified sum, and it might be that the ruler in question, in signifying that he would sign the Instrument of Accession, might bargain that he should be paid a certain sum. This might lead to the suspicion that there was something rather like bribery or inducement. I do not say there is any bribery, although I do not quite follow my right hon. Friend's argument that if the Princes did not want federation that showed that there was no bribery. It may be that the bribes were not high enough. I am not suggesting that, but I think it would be well if we were quite sure that such sums to be paid are laid down before any question arises of a bargain being struck with a ruler who wishes to accede.

Amendment negatived.

8.6 p.m.

The SOLICITOR-GENERAL (Sir Donald Somervell)

I beg to move, in page 86, line 15, to leave out "be paid to that State."

This and other Amendments are drafting Amendments in the Sub-section which the Committee has just been discussing to make it clear that no question of payment will arise, except in those cases where the State waives the specific military guarantee in respect of which the territory was originally ceded.

Amendment agreed to.

Further Amendment made: In page 86, line 17, after "directs," insert: be paid to that State on condition that those guarantees are waived."—[The Solicitor-General.]


I beg to move, in page 87, line 10, at the beginning, to insert "periodical."

This is purely a drafting Amendment. This Sub-section is intended to cover the tributes which are annual or regular payments, and it is to make that clear that this word is inserted.

Amendment agreed to.

Two consequential Amendments made.

8.7 p.m.


I beg to move, in page 88, line 4, at the end, to insert: not being a privilege or immunity surrendered upon the accession of the State, or a privilege or immunity which, in the opinion of His Majesty, for any other reason ought not to be taken into account for the purposes of this Chapter. This is really a little more than a drafting Amendment, but it is intended to reassure the Princes and to make it plain that although the privileges and immunities are limited to the categories mentioned in (a), (b), (c), (d) and (e) on pages 87 and 88, it does not follow that in every single case the privilege can be valued financially.

Amendment agreed to.

8.9 p.m.


I beg to move, in page 88, line 9, after "value," to insert: as determined by a person appointed by the Lord Chief Justice of England. Perhaps for the convenience of the' Committee, in moving the Amendment I might, with your permission, Captain Bourne, refer also to the following Amendment—in page 88, line 13, to leave out "determining from time to time," and to insert the determination from time to time by a person to be appointed by the Lord Chief Justice of England of. That would enable me to deal with the whole of the subject.


The Amendment I called upon the hon. Member to move was the one on the top of page 1160. I think it raises the whole of his point.


It will make the discussion full enough if I take it on that. I was merely trying to arrive at the same end, so that we did not discuss two separate subjects at two separate times. I do not think there is much necessity to go over the ground covered by my hon. Friend the Member for the English Universities (Sir R. Craddock) and my right hon. Friend the Chancellor of the Duchy, but the object of these Amendments is to secure that there shall be some independent person to whom the question of the amount of contribution to be remitted, or the amount of what might be called compensation for the ceded territories, should be submitted to a perfectly impartial judgment. That is a matter of very great difficulty. The Chancellor of the Duchy has admitted that his report is not the easiest document to read, and I find a notice here that the question involves some hundreds of States, and something like 75 lakhs of rupees. One can quite understand that a very considerable amount of interest will be aroused in India by the settlement of this question. My hon. and gallant Friend who spoke a moment ago suggested that there might be difficulty arising if this question were not settled before the States entered into the Federation. I can conceive—although one would certainly hesitate very long before suggesting that anything like bribery is going on, and I was very glad to hear what the Chancellor of the Duchy said—the suggestion being made, not necessarily in this country. It might be made in India. There might be an impression conveyed in India that this wicked Government in England was placating the Princes, and actually doing this sort of thing. For the purpose of removing any such impression, I think the Amendment for which I am responsible might very possibly serve. I wish to reiterate that it is a matter of very great difficulty and seriousness, and it does seem to me vitally important that any suggestion that pressure is being brought to bear should be removed. The Amendment does contain a suggestion of a possible way by which that could be removed.

8.13 p.m.


I am afraid the Government are not able to accept my hon. Friend's Amendment. In the first place, it is quite clear that the value of the immunity will be settled when the negotiations are proceeding for the accession of the State to Federation. The valuation is not a legal question in any sense, and it will be a decision which will be based largely either on ascertained or ascertainable facts on the spot. It can only be arrived at by free and frank negotiations by the parties on the spot, and, so far as my hon. Friend's Amendment is concerned, in the opinion of those best able to judge, it would be only adding a fifth wheel to the coach. In any case it is not a question of legal interpretation or even legal procedure. The valuation is a matter of fact, which can only be ascertained on the spot by those best able to do so.

8.15 p.m.


Does not the right hon. Gentleman see that by not acceding to this Amendment he lays it open to ignorant people to bring a charge of bribery? There are to be negotiations, and, suppose a certain State does not want to accede to the Federation, it looks as though the Government can put up the price of the cash compensation according as they desire that State to accede or not? That is what ignorant people will say.


I must protest against the constant intrusion of the word "bribery" into this matter. There is no question of a bribe, and, in any case, if the hon. and gallant Gentleman and his friends have read the report for which I am responsible, they will find the basis on which financial negotiations are to proceed. I cannot go in detail into that report, especially on a limited Amendment of this kind, but in it will be found the whole basis of the financial adjustments and the recommendation of the basis on which the negotiations ought to proceed. Although they may have to be brought up-to-date to a certain extent, figures of the values of the different immunities on the one hand, and of the contributions on the other, would make any extravagant figure that appeared in any treaty of accession obvious to the whole world. I assure my hon. and gallant Friend that there will be no question of trying to bribe any State into Federation.

Amendment negatived.


I beg to move, in page 88, line 15, to leave out Sub-section (8).

This Sub-section provides that: Subject to the provisions of the last preceding subsection, if any question arises whether a contribution, privilege, immunity or cession is a contribution, privilege, immunity or cession within the meaning of this chapter the decision of His Majesty shall be final. This was one of the points in the Clause to which the Princes took exception as something which had not been previously agreed, and in my right hon. Friend's reply, which was printed in the White Paper, the deletion of this Sub-section was agreed to. It is, in fact, unnecessary, because the question as to what are contributions, privileges, and so on must be settled before the Instrument of Accession is signed and agreed to. The Government have, of course, the last word if what are regarded as unreasonable demands are put forward.

Amendment agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

8.19 p.m.


I am not clear as to the meaning of the limitation of 20 years in the first Sub-section of this Clause. I would ask my right hon. Friend to state the meaning in view of what he has just said, because, if these payments are in lieu of something which has now gone or some undertaking which Governments in past days have given, it does not seem very fair to limit the remission to 20 years. Either it is a payment that must go on for something that has gone for ever, or it should be capitalised.

8.20 p.m.


I will certainly accept the request of the Chancellor of the Duchy and make no reference to the vexed word "bribery." I am sure that all those on these benches are gratified to hear that no pressure of a financial nature has been brought to bear on the Indian Princes to enter the proposed Federation. We would be still more impressed if my right hon. Friend would give us an assurance that a Prince who failed to enter the Federation would in no way be penalised, and that some of the attractive alternatives offered in Clause 145 to those Princes who accede would also be offered to Princes who are not prepared to enter the Federation. Our general contention in regard to this Clause is that it shows up more vividly than almost any other Clause the absurd nature of the Federation which we are proposing to set up. The Chancellor of the Duchy has referred to the report of his Committee. I am sure I am voicing the opinion of everybody when I say that although it was a very difficult report to read in some ways, it was very admirably done. I suggest to my right hon. Friend that there are one or two phrases in it which illustrate in an unalterable way the sort of difficulties against which we shall have to contend in the coming years if this Federation is set up. Sub-section (6) of Clause 145 refers to privileges and immunities, and some of these privileges and immunities consist of the right to levy customs duties, either maritime or internal.

I should be interested if the Chancellor of the Duchy would give us any indication that there is any intention on the part of the Indian Princes to waive their rights to levy maritime and internal customs duties. In regard to maritime duties, my information is that there is very little intention on the part of those Princes who enjoy that right to waive it, and yet the Chancellor of the Duchy in his report said that the idea of a true Federation was difficult to reconcile with the retention of this privilege. He was forced to add that no maritime state was willing to relinquish this right. Even more important are the internal customs duties. As I envisage the Federation, there is to be complete Free Trade over a whole area of British India. The right hon. Gentleman, the Foreign Secretary, in a forceful speech some months ago, drew attention to the way in which the Indian States and British India are so interlaced and interlocked that you pass from one to the other in the twinkling of an eye. He drew a vivid illustration of how essential it was that the Indian States and British India should march together in common partnership by showing how quickly in travelling in a railway train one passes from an Indian State into British India and out of it again.

What will be the position with Indian States, interlaced and interlocked in this way, retaining the right to impose import duties on goods entering their States? What have we to justify us in believing that this absurd position is going to end in anything but the pious hope in the report of the Joint Select Committee that this anti-Federal outlook will disappear? Fundamental as our objections to this scheme are, we join with the Committee in hoping that, if a Federation is set up, it will be a workable Federation, but what indication is there that the anti-Federal outlook will disappear? I believe strongly that the Princes of India and His Majesty's Government are not talking the same language on this question of Federation, that they have totally different ideas of Federation, irreconcilable ideas; and we believe that the only indication hitherto given of what they are likely to do on the subject of internal customs duties has been shown by their attitude towards the matter raised in another part of this Clause, namely the question of the remission of cash contributions. It is a curious and almost unbelievable fact that even those States whose cash contributions we propose to remit under this Bill, subject, of course, to certain provisos, are not themselves, I understand, prepared to remit cash contributions owing to them by other Indian States which have hitherto paid tribute to them. It really does suggest that the pious hopes of His Majesty's Government are doomed to be disappointed, and that is why I personally hope, though I see no expectation whatever of it, that Clause 145 will not form part of this Bill, and I throw out that suggestion to the Chancellor of the Duchy, who himself has provided the ammunition which really devastates this particular Clause.

Question put, "That the Clause, as amended, stand part of the Bill."

The Committee proceeded to a Division.

Major Davies and Dr. Morris-Jones were appointed Tellers for the Ayes; but there being no Members willing to act as Tellers for the Noes, The CHAIRMAN declared that the Ayes had it.

Clause 146 ordered to stand part of the Bill.