ABDUL MAJID HAJI MAHOMED Vs. P R NAYAK

JUDGEMENT

(1.) THIS appeal arises out of a petition filed to challenge certain orders passed by the Custodian of Evacuee Property. The facts briefly stated leading up to the petition are that the second petitioner, which is a limited company, was incorporated on 14th July 1933, as a private limited company with a share capital divided into 44,149 shares. The number of share-holders was 35 and the first petitioner is a share holder of this limited company with a holding of 2,715 shares. On 7-10-1949 two notifications were issued by the Deputy Custodian of Bombay, one under Section 4 (2) of Bombay Act XXIV [24] of 1949 vesting the property of the second petitioner company in the Custodian, and the second notification under Section 6 (1) of 6he same Act dealing with the possession and control of that property. On 14th October 1949, two notifications were issued by the Deputy Custodian of Evacuee Property of Thana, one again under Section 4 (2) and the other under Section 6 (1) also relating to the property of the second petitioner. On 6th December 1949, the second petitioner appealed to the Additional Custodian under Section 24 of Ordinance No. XXVII [27] of 1949 which had replaced the Bombay Act on 18th October 1949. This appeal was heard by the Custodian on 2nd March 1950, and on 3rd March 1950, the Custodian directed that notices be issued to the shareholders of the second petitioner company. These notices were issued in exercise of the powers of revision conferred upon the Custodian under Section 26 (1) of Ordinance No. XXVII [27] of 1949. These notices called upon the shareholders to show cause why orders should not be passed declaring them evacuees under Clauses (i), (ii) and (iii) of Section 2 (d) of the Ordinance and all their property be declared evacuee property. On 28th March 1950, an order was passed by the Custodian on the appeal preferred by the company holding that the orders of the Custodian and the Deputy Custodian were bad and those orders were set aside. On 28th March 1950, a notification was issued by the Custodian under Section 7 (3) of the Ordinance and by this notification the Custodian notified the evacuee properties specified in the schedule as having vested in him under that section, and the properties notified were the shares of all the 35 shareholders of the company including obviously the shares of the first petitioner. On 4th April 1950, the Custodian issued a requisition under Section 10 (2) (1) of the Act upon the directors of the company requesting them to call an extraordinary general meeting of the company under Article 40 of the articles of association to consider a special resolution which the Custodian proposed to move at that meeting. By the petition the petitioners challenged the notification issued by the Custodian vesting the shares of the share-holders in the Custodian and also the requisition issued by the Custodian under Section 10 (2) (1) of the Act. The petition came before Shah J. who dismissed the petition. Before us the orders passed by the Custodian have been challenged on various grounds. In the first place, it is contended that the orders were issued under a piece of legislation which was passed by the Legislature without having legislative competence. The orders are also challenged on the ground that the legislation in question is unconstitutional as violating the fundamental rights guaranteed to the subject by our Constitution. The orders are further challenged on the ground that they are in excess of jurisdiction conferred upon the Custodian and also as violating the fundamental principles of natural justice.

(2.) BEFORE these points can be considered, it is necessary to look at the scheme of the Ordinance under which the orders challenged were issued. We are not concerned in this appeal with the Bombay Act because the orders issued by the Custodian and the Deputy Custodian against the second petitioner were held to be bad by the Custodian himself. The orders now challenged are those issued under the Ordinance, and therefore what is necessary to be considered is the scheme of the Ordinance. It might be stated that this Ordinance was replaced by an Act of the Union which came into force on 7th April 1950, being Act XXXI [31] of 1950, and substantially the Act reproduces the provisions contained in the Ordinance. Now the object and purpose of the legislation is stated in the preamble as being "whereas an emergency has arisen which makes it necessary to provide for the administration of evacuee property and for certain matters connected therewith. " then Section 2 of the Ordinance deals with definitions, and the important definition is one of an "evacuee. '' The definition falls under three parts. The first part deals with a person who, on account of the setting up of the Dominions of India and Pakistan or on account of civil disturbances or the fear of such disturbances, leaves or has, on or after 1st March 1947, left, any place in a province for any place outside the territories forming part of India. The second category consists of any person who is resident in any place now forming part of Pakistan and who for that reason is unable to occupy supervise or manage in person his property in any part of the territories to which this Ordinance extends, or whose property in any part of the said territories has ceased to be occupied, supervised or managed by any person or is being occupied, supervised or managed by an unauthorised person. And the third category consists of persons who have, after 14th August 1947, acquired by way of allotment or by means of unlawful occupation or other illegal means any right to, interest in or benefit from any property which is treated as evacuee or abandoned property under any law for the time being in force in Pakistan. Then we have the definition of "intending evacuee" with which we are not concerned for the purpose of this appeal. Then we have the definition of "evacuee property" which is defined as any property in which an evacuee has any right or interest (whether personally or as a trustee or as a beneficiary or in any other capacity), and includes any property-- (1) which has been obtained by any person from an evacuee after 14th August 1947, by any mode of transfer, unless such transfer has been confirmed by the Custodian, or (2) belonging to any person who, after the commencement of this Ordinance, does any of the acts specified in Clause (e) of Section 2, or in which any such person has any right or interest, to the extent of such right or interest The acts specified in Clause (e) are the acts which would make a person an intending evacuee. Then certain properties are excluded from this definition with which we are not concerned. Then we have Section 7 which confers the power upon the Custodian to declare certain property as evacuee property. Sub-section (1) provides that where the Custodian is of the opinion that any property is evacuee property within the meaning of the Ordinance, then he may pass an order declaring any such property to be evacuee property, provided he causes notice thereof to be given in such manner as may be prescribed to the persons interested and he holds such inquiry into the matter as the circumstances of the case permit. Then Section 8 deals with the vesting of evacuee property in the Custodian, and any property which is declared to be evacuee property under Section 7 vests in the Custodian. Section 9 gives the power to the Custodian to take possession of evacuee property which is vested in him. Section 10 deals with the powers and duties of the Custodian generally. Sub-section (1) gives wide powers to the Custodian to take such measures as he considers necessary or expedient for the purposes of securing, administering, preserving and managing any evacuee property which has vested in him, and, for any such purpose as aforesaid, do all acts and incur all expenses necessary or incidental thereto. Then Sub-section (2), without prejudice to the generality of the powers conferred under Sub-section (1), indicates various specific powers which are conferred upon the Custodian, and the important ones to notice are those under Sub-clause (1) which provides that where the property vesting in the Custodian consists of share or shares in a company, the Custodian, notwithstanding anything to the contrary contained in the Companies Act or the articles of association of the company, may exercise the same rights in the matter of making a requisition for the convening of a meeting as the evacuee share-holder himself would have done. Therefore, in effect, under this Sub-clause the rights of the share-holder for the purpose of convening a meeting are made exercisable by the Custodian in whom the shares have vested, and it is under this power that the Custodian issued the requisition which has been challenged in this petition. Then Sub-clause (n) gives the power to the Custodian to pay to the evacuee or to any member of his family or to any other person as in the opinion of the Custodian is entitled thereto, any sums of money out of the funds in his possession ; and Sub-clause (c) empowers him to transfer in any manner whatsoever any evacuee property, notwithstanding anything to the contrary contained in any law or agreement relating thereto. Then Section 13, Sub-section (1), provides that any amount due to any evacuee in respect of any property which is vested in the Custodian or in respect of any transaction entered into by the evacuee, shall be paid to the Custodian by the person liable to pay the same; and Sub-section (2) provides that any payment made otherwise than in accordance with Sub-section (1) would not be a proper discharge of the person making the payment. Section 15 imposes an obligation upon the Custodian to maintain accounts of the property vested in him. Section 16 deals with restoration of property and it provides that the property may be returned to the evacuee provided the evacuee produces in support of his application for restoration a certificate from the Central Government or from any person authorised by it in this behalf to the effect that the evacuee property may be so restored if the applicant is otherwise entitled to it. Then Chap. V, which contains Sections 24 to 28, deals with appeals, review and revision. The scheme of Section 24 is that when the original order has been passed by a Deputy or Assistant Custodian, an appeal lies to the Custodian, and when the original order has been passed by the Custodian, Additional Custodian or Authorised Deputy Custodian, an appeal lies to the Custodian General, and there is a special provision with regard to an appeal when a person is declared to be an evacuee within the meaning of Section 2 (d) (iii) and the person is aggrieved by that decision or when the property is declared to be evacuee property within the meaning of Section 2 (f) (2 ). Under Section 25 appeals that arise from a decision under Sub-clause (iii) of Clause (d) of Section 2 or under sub Clause (2) of Clause (f) of Section 2 lie to the District Judge designated by the Provincial Government. Then Section 26 gives the power of review or revision to the Custodian, Additional Custodian or Authorised Deputy Custodian and the power of review or revision consists in calling for the record of any proceeding under the Ordinance which was pending before or has been disposed of by any officer subordinate to him for the purpose of satisfying himself as to the legality or propriety of any orders passed in the said proceeding, and it confers the jurisdiction upon the Custodian to pass such order in relation thereto as he thinks fit. It also provides that the Custodian will not pass any order under this sub-section prejudicial to any person without giving such person a reasonable opportunity of being heard. Similar powers of revision are also vested in the Custodian General under Section 27. Section 28 makes the orders passed final and declares that they shall not be called in question in any Court by way of appeal or revision or in any original suit, application or execution proceeding. Chapter VI deals with penalties and procedure. Chapter VII deals with miscellaneous matters, and Section 43 bars the jurisdiction of civil Courts in certain matters, and by Sub-clause (c) no Court shall have jurisdiction to question the legality of any action taken by the Custodian General or the Custodian under this Ordinance. Section 53 confers power upon the Central Government to make rules to carry out the purposes of the Ordinance.

(3.) NOW looking to the various provisions of this Act, it is clear that the object and purpose of the Legislature in enacting this Ordinance was to deal with the custody, management and administration of evacuee property. The evacuee was to be prevented from exercising any rights as an Owner in respect of his property, and the property was to vest in the Custodian. But the property was not to vest in him as an owner with the rights of an owner; it was to vest in him for the purposes of the Ordinance; his powers and rights were confined to the provisions contained in the Ordinance itself. A further significant feature of the Ordinance that has to be noticed is that the Ordinance did not provide for the ultimate destination of the property which was taken away from the evacuee and vested in the Custodian. Although Section 16 provided for restoration of property, that was only in special cases referred to in that section. The legislation is very analogous to the legislation enacted in different countries during the war. When the provision was made for the appointment of Custodian of enemy property, the property of the enemy vested in the Custodian and no provision was made for the ultimate destination of that property. The ultimate destination was left to be determined by any treaties that might be signed by countries at war.