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PETITIONER: N. S. GUJRAL

       Vs.

RESPONDENT: CUSTODIAN OF EVACUEE PROPERTY & ANR.

DATE OF JUDGMENT: 12/09/1967

BENCH: WANCHOO, K.N. (CJ) BENCH: WANCHOO, K.N. (CJ) BACHAWAT, R.S. RAMASWAMI, V. MITTER, G.K. HEGDE, K.S.

CITATION:  1968 AIR  457            1968 SCR  (1) 497  CITATOR INFO :  D          1980 SC1206  (9,40)

ACT: Displaced Persons (Compensation and Rehabilitation) Act  (44 of  1954), s. 12 and Administration of Evacuee Property  Act (31  of 1950), ss. 10(1) and 10(2) (m) and (n)-If  violative of  Arts. 14 and 19(1)(f) of the Constitution  of  India-Law impairing   obligation   under   contract-If   ultra   vires Constitution.

HEADNOTE: The  appellant  obtained a decree against two  persons  who, along  with their wives, migrated to Pakistan.   Before  the decree was passed, the two judgment debtors had executed two deeds  releasing  their property, which was  a  building  in favour  of  the wives.  The property  was  declared  evacuee property  under the Administration of Evacuee Property  Act, 1950 and on the appellant’s application, his claim based  on the  decree  was registered by the  Custodian.   Later,  the Custodian  held  that the evacuee property belonged  to  the wives  of the judgment-debtors.  The appellant filed a  suit for setting aside the release deeds on the ground that  they were of no effect as being in fraud of the creditors.   But, before  the  suit  was filed,  the  Central  Government,  in pursuance  of  a  notification issued under  s.  12  of  the Displaced  Persons  (Compensation and  Rehabilitation)  Act, 1954,   acquired   the  property.   As  a  result   of   the notification, the property which was in law the property  of the  evacuees-though it was under the administration of  and vested in, the Custodian under the 1950 Act-became the  pro- perty of the Central Government free from all  encumbrances. So,  in addition to the main plea in the suit the  appellant also  contended  that  s.  12  of  the  1954  Act  and   the notification  issued thereunder violated Arts. 19(1)(f)  and 14  of  the  Constitution.  He further  contended  that  the amendment by Act 91 of 1956 of s. 10(2)(m) of the 1950  Act, as  a result of which the Custodian’s power to pay the  eva- cuee’s  debts was deleted from the clause, was ultra  vires. On  an application under Art. 228, the High Court tried  the

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two  constitutional  issues  and decided  them  against  the appellant and remanded the suit to the trial court. In appeal to this Court, HELD:  (1)(a) Section 12 of 1954 Act did not interfere  with the  appellant’s right to acquire, hold and dispose  of  his property,  namely, the decree against the evacuees.   At  no time  did  the appellant have any right  whatsoever  in  the property which vested in the Central Government on the issue of the notification.  Its only effect was that the appellant could  not proceed against the property in execution of  his decree.   Therefore  the  appellant  could  not  claim   the protection under Art. 19(1)(f). [501A: 502A-D] (b) It could not be said that there was violation of Art. 14 on  the  ground  that  decree-holders  against   non-evacuee property  could execute their decrees  while  decree-holders against  evacuee property could not.  There is a  reasonable classification  between  evacuee  property  and  non-evacuee property,  and there is a clear nexus between the object  to be  achieved  by  the 1954 Act,  namely,  rehabilitation  of evacuees from Pakistan, and the provision in s. 12, by which 498 the property of evacuees in India is to be utilized for such rehabilitation. [502E-G] (c)  The  appellant cannot also be heard to say that  s.  12 impairs   the  obligation  of  the  judgment-debtors   under contract  between  them  and himself because,  there  is  no prohibition  against such a law in the Indian  Constitution. [501F] (2)  The amendment of S. 10(2)(m) made no difference to  the legal  position, for the power of the Custodian to  pay  the debts  of  the evacuee still remained  unimpaired  under  S. 10(2)(n) read with 10(1).  Therefore, it was unnecessary  to consider  the invalidity of -the amendment of  s.  10(2)(m). [500F-H] Raja  Bhanupratap, Singh v. Assistant Custodian  of  Evacuee Property, U.P. [1966] 1 S.C.R. 304, followed. (3) Though the appellant could not claim to proceed  against the property in suit or its income, after the date on -which it became vested in the Central Government by virtue of  the notification under s. 12, he could ask the Custodian to  pay him  out  of the moneys lying with him on the date  of  such vesting  if he can satisfy him in the manner provided in  s. 10(2)(n)  read  with s. 10(1) of the 1950 Act.   ’The  trial court  would therefore have to decide the issue whether  the release-deeds  were-fictitious  and fraudulent, and,  if  it found  in favour of the appellant it would then be  open  to him  to  approach  the  Custodian for  such  orders  as  the Custodian thinks fit to pass with respect to the moneys,  if any, lying with him on the date of vesting. [503F-H]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 642 of 1966. Appeal  by special leave from the judgment and  order  dated October 21, 1962 of the Punjab High Court (Circuit Bench) at Delhi in Civil Original No. 11-D of 1960 read with  judgment and  order dated October 26, 1964 of the said High Court  in R.S.A. No. 245-D of 1964. N.   S. Bindra and D. D. Sharma, for the appellant. G.   R. Rajagopaul, S. P. Nayyar for R. H. Dhebar, for the respondents. The Judgment of the Court was delivered by Wanchoo, C. J. The appellant obtained a decree for over  Rs. 41,000 against Modern Electric Iron and Brass Works,  Delhi,

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which was the property of two partners, namely, Mohd.  Sabar and Noor Mohd.  Butt. in January 1950.  He also obtained an- other  decree  for  over Rs. 95.000  against  the  same  two persons  and ,one more to which proceeding the Custodian  of Evacuee Property (hereinafter referred to as the  Custodian) had  also  been made a party.  Before.  however,  the  first decree was obtained by the appellant.  Mohd.  Sabar and Noor Mohd.  Butt had in April 1947 executed two deeds of  release with  respect  to their property in favour of  their  wives. Later  Mohd.   Sabar and Noor Mohd.  Butt  and  their  wives migrated  to  Pakistan and their properties  were  -declared evacuee  properties  under  the  Administration  of  Evacuee Property  Act, No. 31 of 1950, (hereinafter referred  to  as the 499 1950-Act).   Under s. 10 of the 1950-Act the  Custodian  had the power to pay any debt due from the evacuee to any person subject to rules framed thereunder.  Further under the Rules a  person  to  whom an evacuee owed money  could  apply  for registration  of his claim and the Custodian could  register such claim; but mere registration of a claim did not entitle the  claimant  to payment, and the  Custodian  could  refuse payment for reasons to be recorded. The claim of the appellant, based on the first decree passed in his favour, was registered by the Custodian.  But in June 1950  the  Custodian  held  that  the  evacuee  property  in question  in the present case belonged to the wives  of  the judgment-debtors  (namely,  Mohd.   Sabar  and  Noor   Mohd. Butt).  He further directed the appellant to go to the civil court  to Yet the release-deeds set aside.  On November  28. 1955. the appellant filed the suit out of which the  present appeal  has  arisen in the court of  the  subordinate  Judge First  Class,  Delhi,  claiming that  the  release-deeds  in question  were  of  no  effect  a  being  in  fraud  of  the creditors.   He claimed a declaration that the  building  in suit  belonged to Mohd.  Sabar and Noor Mohd.  Butt and  not to their wives and that the release-deeds of April 1947 were fictitious  and fraudulent and intended to defeat and  delay the  creditors  and were not binding on the  appellant.   He also  claimed  that  the Custodian was  bound  to  open  the account  of the income of the said building in the names  of Mohd.   Sabar and Noor Mohd.  Butt and the proceeds  of  the said  building were bound to be adjusted against the  claims of the appellant. The  suit  was resisted by the Custodian and  the  Union  of India.   Their case firstly was that the civil court had  no jurisdiction  to  entertain  the  suit.   Secondly,  it  was pleaded that the property in dispute which was a building in the  city  of  Delhi  had  been  acquired  by  the   Central Government in pursuance of a notification issued on June  3, 1955, under s. 12 of the Displaced Persons (Compensation and Rehabilitation) Act.  No. 44 of 1954. (hereinafter  referred to  as the 1954-Act) and therefore the appellant  could  not get  a  declaration to the effect that the proceeds  of  the suit  building  should be adjusted against his  claim.   The appellant   had  also  pleaded  in  his  plaint   that   the acquisition  of the building by the notification of June  3. 1955  was  subject to his rights and that in  any  case  the notification and s. 12 of the 1954-Act were ultra vires. Originally, the trial Court dismissed the suit holding  that as  the  property in suit had been acquired by  the  Central Government  by  the  notification dated June  3,  1955,  the appellant could not claim to proceed against the property or its income.  The appellant went in appeal and the  appellate court  remanded the suit on the ground that  the  appellants

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plea that the notification 500 and  s.  12 of the 1954-Act were ultra vires had,  not  been decided.   When  the  suit went back for  re-trial  on  this issue, the appellant applied for transfer under Art. of  the Constitution   to   the   High  Court   praying   that   the constitutional issue be first determined by the High  Court. This application was allowed and finally the  constitutional question  relating to the validity of s. 12 of the 1954  Act was  considered by a Division Bench of the High  Court.   It may  be  mentioned  here that it had  been  decided  by  the Subordinate Judge that the civil, court had jurisdiction and that  matter is not in dispute before us.  When  the  matter came to the High Court, the appellant further challenged the amendment made to the 1950-Act by which cl. (m) of s.  10(2) was amended as ultra vires.  Reliance in this connection was placed  on Art. 19 of the Constitution and also on Art.  14. The High Court held against the appellant on both points and sent   the  case  back  to  the  trial  court  for   further consideration   in  the  light  of  its  judgment   on   the constitutional issues that were raised.  The appellant  then applied  to  the High Court for grant of  a  certificate  to appeal  to  this Court, which was  refused.   Thereupon  the appellant  applied for and obtained special leave from  this Court-, and that is how the matter has come up before us. The  same two points which were urged before the High  Court have  been raised before us on behalf of the appellant.   So far  as  the first point relating to the invalidity  of  the amendment to s. 10(2)(m) is concerned, the matter is now  of academic  interest in view of the decision of this Court  in Raja  Bhanupratap  Singh  v.  Assistant  Custodian   Evacuee Property  U.P.(1). It was held by the Court that "the  power to  pay the evacuee’s debts was derived both under cls.  (m) and (n) of s. 10(2).  Therefore the deletion from cl. (m) of the Custodian’s power to pay the debts, by the Amending  Act of  1956,  and the consequential deletion of r.  22  of  the Rules  framed  under  the Act. by  which  ’a  machinery  was provided for exercising that power did not affect the  power which  is  conferred by S. 10(2) (n) and by S.  10(1).   The power to administer, under S. 10(1) is not merely a power to manage on behalf of the evacuee so as   to   authorise   the Custodian  only  to recover and collect the  assets  of  the evacuee;  it includes power to discharge his obligations  as well,  to pay such debts which, in the opinion of  the  Cus- todian,  are binding upon the evacuee".  This Court  further held that the decree of the civil court was not decisive  of the question whether a person making a claim was entitled to the  money  claimed  by him; it was  for  the  Custodian  to determine  whether  he  was so entitled.  In  view  of  this decision it is unnecessary to express any opinion as to  the invalidity of the amendment of cl.(m)   of S. 10(2) for  the amendment made no difference to the legal (1) [1966] 1 S.C.R. 304. 501 position  as the power of the Custodian to pay the debts  of the  evacuee  still  remained, unimpaired.   If  be  was  of opinion that the debts were genuine, he could pay them. This brings us to the main question that has been argued  in the  present appeal, namely, that s. 12 of the  1954-Act  is invalid  because it is an infringement of the right to  hold property which the appellant has under Art. 19(1)(f) of  the Constitution  and is not saved as a  reasonable  restriction thereon.   The  argument  is put thus.   The  appellant  had advanced  money to the two evacuees, namely.   Mohd.   Sabar and  Noor  Mohd.  Butt.  On the basis of the  loan,  be  had

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obtained  a  decree in January 1950.  He had  the  power  to execute  that decree against the property of  his  judgment- debtors.   By  taking  away the property  of  the  judgment- debtors, ,After they bad become evacuees and by vesting that property   free  from  all  encumbrances  in   the   Central Government under s. 12 of the 1954-Act the appellant’s right to proceed against that property had disappeared.  Therefore s. 12 of the 1954-Act was violative of Art. 19(1)(f). as the appellant’s   holding  of  the  decree  had  been   rendered illusory.   Reliance  in this connection is placed  on  four decisions  of  the  Supreme Court of the  United  States  of America.  namely, (i) Von Hoffman v. The City of  Quincy(1), (ii) Ranger v. City of New Orleans,(2) (iii) Peirce  Coombes v.  Milton E. Getz(3) and (iv) W. B. Worthen Co. v. Mrs.  W. D. Thomas(4) Before we consider the argument raised before us we may  say at  once  that  the four cases on which  reliance  has  been placed  on behalf of the appellant are entirely  beside  the point  and  of no assistance.  These cases were based  on  a provision  in  Art. 1, s. 10 of  the  American  Constitution which  inter alia lays down that "no State shall......  pass any law impairing the obligation of contracts.........There is no such provision in our Constitution and.therefore  the appellant cannot be beard to say that as s. 12 of the  1954- Act  impairs the obligation of the contract between him  and the two evacuees, the section is bad. Now let us turn to the argument based on Art. 19 (1)(f).  It is clear to us that the argument as put forward on behalf of the  appellant is fallacious and untenable.  Section  12  of the  1954-Act does not in any manner affect the decree  held by the appellant against Mohd.  Sabar and Noor Mohd.   Butt. All  that it provides is that the property, which  upto  the time the Act of 1954 was passed, was in law the property  of the evacuees, though it was under the administration of  the Custodian and vested in him for that purpose under the 1950- Act, would on a notification issued under s. 12 of the 1954- Act become the property of the Central (1)  18 L.Ed. Wallace 403. (2)   26 U.S., S.C.R. 132. (3)   76 L.Ed. 866. (4)   78 L.Ed. 1344. 502 Government and the right, title, interest of the evacuee  in such  property  would  thereupon  be  extinguished  and  the property  shall  vest absolutely in the  Central  Government free  from all encumbrances.  At no time did  the  appellant have  any right whatsoever in the property which  vested  in the  Central  Government on the issue  of  the  notification under  s. 12.  It may be that if the owners had  not  become evacuees  and if the property had not been declared  evacuee property,  the appellant might have proceeded  against  that property in execution of his decree.  It may also be that he cannot  do so now after the said notification under  s.  12. But  s.  12  does  not in our  opinion  interfere  with  the appellant’s  right  to  acquire, hold  and  dispose  of  his property,  namely the decrees against Mohd.  Sabar and  Noor Mohd.   Butt.   As  the appellant had  no  interest  in  the property  in  suit,  the fact that it was  acquired  by  the Central  Government  by a notification under s.  12  of  the 1954-Act did not in any way affect the appellant’s right  to acquire,   hold  and  dispose  of  his  property.   In   the circumstances,  the appellant cannot claim protection  under Art.  19(1)(f) at all with respect to the property  in  suit and  it is not necessary to consider whether S. 12 could  be saved  under Art. 19(5).  We therefore agree with  the  High

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Court  that the appellant cannot claim that s. 12  is  ultra vires  Art.  19(1)(f) and therefore  the  notification  made thereunder  affects his fundamental right to  acquire,  hold and dispose of property. Further  the  argument that s. 12 is bad under Art.  14  has also  no force.  The contention under this head is that  the creditors who have decrees against non-evacuees can  execute their  decrees against the properties of  non-evacuees,  but the creditors having decrees against evacuees cannot execute them  against their properties after they had vested in  the Central  Government  by a notification under s.  12  of  the 1954-Act; and this amounts to discrimination under Art.  14. But  it  is  well-settled that  the  Constitution  does  not contemplate equality of all laws or application of all  laws equally  to every person.  There is a  clear  classification between evacuee property and non-evacuee property.  There is a  clear  nexus  between the object to be  achieved  by  the enactment   of  the  1954-Act,  namely,  rehabilitation   of evacuees  from Pakistan and the provision in s. 12 by  which the property of evacuees in India is to be utilised for such rehabilitation.  There is therefore. no infringement of Art. 14 in the circumstances. Lastly  it is urged on behalf of the appellant on the  basis of  the decision of this Court in Raja Bhanupratap  Singh(1) that  the  appellant was entitled to ask  the  Custodian  to consider  his case under s. 10(2) (n) read with s. 10(1)  of the 1950-Act, and for that purpose it is necessary to decide the  main  question  raised in the suit,  namely,  that  the release-deeds of 1947 in favour of the wives (1)  [1966] 1 S.C.R. 304 503 were of no effect and therefore the property, though evacuee property,  was the property of the judgment-debtors  of  the appellant, namely, Mohd.  Sabar and Noor Mohd.  Butt.  It is also  pointed out that the notification of June 3, 1955  was only  with  respect  to immovable  property  and  there  was nothing  to  show that the Central Government had  issued  a notification  under s. 14(1)(b) of the 1954-Act relating  to cash  balance, if any, lying with the Custodian on the  date the  property was acquired.  It is urged that all  that  the notification of June 3, 1955 means is that as from that date no action could be taken against the property in suit or its income.   But if there was any money with the  Custodian  on the  date  of  vesting and if no order had  been  passed  in respect  thereof under s. 14(1)(b), the appellant  would  be entitled to ask the Custodian to consider whether he  should be paid anything out of the moneys lying with the  Custodian provided  he  could  establish that  the  property  was  the property  of his judgment-debtors, namely, Mohd.  Sabar  and Noor  Mohd.  Butt and not of their wives.   The  declaration that the appellant sought was wide in terms in as much as he claimed  that  he was entitled to have  his  claim  adjusted against the proceeds of the said building and these proceeds will  include  any  income of a period before  the  date  of vesting  under  the notification under s. 12.  It  is  urged that as such it is necessary to decide the issue whether the release  deeds of April 1947 were fictitious and  fraudulent intended to defeat and delay the creditors and therefore the property belonged to Mohd.  Sabar and Noor Mohd.  Butt.   If that  is held in his favour by the civil courts he would  be entitled to go to the Custodian and ask him to pass an order in  his favour under s. 10(2)(n) read with s. 10(1) and  pay him  out  of  the  moneys lying with him  on  the  date  the property   vested  in  the  Central  Government  under   the notification under S. 12.

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We  are. of opinion that there is force in this  contention. Though  the  appellant cannot claim to proceed  against  the property  in suit or its income after the date on  which  it vested   in  the  Central  Government  by  virtue   of   the notification  under s. 12, he can ask- the Custodian to  pay him  out  of the moneys lying with him on the date  of  such vesting  if he can satisfy him in the manner provided in  s. 10(2)(n)  read with s. 10(1) of the 1950-Act.  We  therefore direct  that when the case goes back to the trial  court  as ordered  by the High Court, the trial court will decide  the issue  whether  the  deeds of release  of  April,  1947  are fictitious  and fraudulent intended to defeat and delay  the creditors  and not binding on the appellant.  If  the  trial court  decides  in favour of the appellant it will  then  be open to him to approach the Custodian under s. 10(2)(n) read with s. 10(1) for such orders as the Custodian thinks fit to pass  with respect to moneys, if any, lying with him on  the date  of vesting.  It may be mentioned that learned  counsel for the appellant submitted that this property in fact 504 vested  in  the Central Government by some  notification  in 1958  and  not by the notification dated June  3,  1955,  as mentioned  in  the plaint.  On the other side  it  has  been submitted  that some orders have been passed by the  Central Government under S. 14 (1)(b).  These are matters which  may require  to  be gone into by the trial court  and  for  that purpose  it  may be necessary to amend the  plaint  and  the written statement, and this we permit. We therefore dismiss the appeal subject to the  observations made  above.  In the circumstances we order parties to  bear their  ,own costs of this Court as also of the  High  Court. Costs of other -courts will abide the final result. V.P.S.                Appeal dismissed. 505