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PETITIONER: LACHHMAN DASS & OTHERS

       Vs.

RESPONDENT: MUNICIPAL COMMITTEE, JALALABAD & OTHERS

DATE OF JUDGMENT: 12/02/1968

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. HIDAYATULLAH, M. (CJ) BACHAWAT, R.S. MITTER, G.K. HEGDE, K.S.

CITATION:  1969 AIR 1126            1969 SCR  (3) 645  1969 SCC  (1) 653  CITATOR INFO :  RF         1970 SC 564  (97)  R          1983 SC1301  (2)

ACT: Displaced  Persons  (Compensation and  Rehabilitation)  Act, 1954,   S.   20  B-If  violative  of  Art.  31(2)   of   the Constitution.

HEADNOTE: In 1949 certain property was treated as evacuee property and the District Rent and Managing Officer, Jalalabad, began  to recover  rent  in respect of it.  The  respondent  Municipal Committee  claimed the property as its own and filed a  suit for  a  declaration to that effect.  By order of  the  trial court the matter was referred to the Custodian General  who, in   exercise  of  his  powers  under  section  27  of   the Administration  of Evacuee Property Act 1950, held that  the property  under  dispute  had wrongly  been  taken  over  as evacuee property and ordered it to be released in favour  of the  respondent  Municipal Committee.  After  the  Committee applied  for restoration of possession of the property,  the District  Rent  and  Managing Officer sent  a  memo  to  the respondent committee stating that the property under dispute had  already been transferred to the occupants and that  its assessed price was Rs. 6,542.  He further stated that it was not expedient or practicable to restore the property to  the respondent committee and it had, therefore, been decided  to transfer   to  it  any  other  immovable  property  in   the compensation  pool of the equivalent amount in lieu  thereof under section 20B of the Displaced Persons (Compensation and Rehabilitation   Act)  1954.   By  a  writ   petition,   the respondent challenged the vires of section 20-B of 1954  Act as  well as the validity of the Memo from the District  Rent and Managing Officer, Jalalabad.  The High Court,  following its  early decision in Kirpal Singh v.  Central  Government; I.L.R.  [1967]  2 P. & H., 574, held that section  20-B  was unconstitutional being ultra vires Articles 14 and  19(1)(f) of the Constitution.  It held, however, that the section did

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not violate Art. 31(2) of the Constitution. On appeal to this Court, HELD  : Section 20-B of the Displaced Persons  (Compensation and   Rehabilitation)  Act  1954  was  violative   of   both provisions   of  Art.  31(2)..  Although  to   provide   for rehabilitation of displaced persons was a public purpose, it did not serve any public purpose to provide in Section  20-B that if a displaced person was in occupation of some  body’s property  he  could not be given other property  because  it would  not be expedient or practicable to do so.  A  public, purpose  may  be  served  if it had  been  provided  that  a displaced  person  may not be ousted  because  his  business would be ruined or that he would be completely thrown on the street,  but to provide in the section that if  the  Central Government  does not think it expedient or  practicable  for its  own convenience or for the convenience of a  lessee  or licensee  who is not a displaced person it may  not  restore property  serves no public purchase.  Under the section  the Central  Government was entitled not to restore property  to serve a purpose other than a public purpose and consequently the section was ultra vires Art. 31(2). [650 H] 646 The  section was also violative of Art. 31(2) as it did  not fix   any  compensation  or  Jay  down  any  principle   for compensation. Amar  Singh v. Custodian, Evacuee Property,  Punjab,  [1957] S.C.R. 801, referred to.

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos. 1407  and 1569 of 1968. Appeals  from the order dated May 3, 1967 of the Punjab  and Haryana High Court in Letters Patent Appeal No. 37 of 1967. S.   K. Mehta, K. L. Mehta, for the appellants (in C.A.  No. 1407 of 1968) and respondents Nos. 2 to 7 (in, C.A. No. 1569 of 1968). Bishan  Narain, A. Sreedharan Nambiar and S. P.  Nayar,  for the  appellants (in C.A. No. 1569 of 1968)  and  respondents Nos. 2, 4 and 5 (in C.A. No, 1407 of 1968). U.   P.  Singh,  for respondent No. 1 (in C.A. No.  1407  of 1968). The Judgment of the Court was delivered by Sikri, J. The Municipal Committee, Jalalabad, respondent be- fore  us in these appeals filed an application  under  Arts. 226 and 227 of the Constitution praying that S. 20 B of  the Displaced  Persons  (Compensation and  Rehabilitation)  Act, 1954-hereinafter  referred  to as  the  Compensation  Act-be declared   ultra  vires  the  Constitution  and   that   the memorandum  dated  March  14,  1963,  communicated  by   the District  Rent and Managing Officer, Jalalabad, be  quashed. The  learned Single Judge, following an earlier judgment  of the  Punjab  and Haryana High Court in Kirpal Singh  v.  The Central Government(1), held that s. 20B of the  Compensation Act  was ultra vires, and quashed the impugned  order  dated March 14, 1963, and directed the restoration of the property in dispute to the Municipal Committee.  An appeal was  taken to,  the  Letters  Patent Bench but this  was  dismissed  in limine.  Two appeals have been filed against this  judgment, one  by  the  Union  of  India  and  its  officers  who  are interested only in the question of the vires of the section, and the other by Lachhmandas and others to whom the shops in dispute have been transferred. The  relevant  facts may be stated shortly.   The  Nawab  of

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Mamdot  became  an evacuee in 1947 on the partition  of  the country and his property was taken over by the Custodian  as evacuee  property.  In 1949, the District Rent and  Managing Officer  treated  five  shops,  situated  in  Chowk   Kalan, Jalalabad, as belonging to the Nawab of Mamdot and began  to recover  the  rent  of  the shops  from  the  tenants.   The Municipal  Committee  protested and  lengthy  correspondence ensued between the Municipal Committee and (1)  I.L.R. [1967] 2 P. & H. 574. 647 the  Custodian.  Eventually the Municipal Committee filed  a Civil  Suit  in 1958  against the Union  of  India  for  a declaration that the said shops were their own property  and not evacuee property.  Ultimately, the Trial Court, by order dated  January  8, 1962, made a reference to  the  Custodian General  for determining the question whether the  shops  in dispute were evacuee property or-not.  The Deputy  Custodian General,   exercising  his  powers  under  s.  27   of   the Administration  of Evacuee Property Act,  1950  (hereinafter referred  to as the Evacuee Act) held that the  property  in dispute had been wrongly taken over as evacuee property  and ordered  that  the five shops be released in favour  of  the Municipal  Committee,  Jalalabad.  On  this,  the  Municipal Committee  applied to the Regional Settlement  Commissioner, under  r.  37  of the  Administration  of  Evacuee  Property (Central) Rules, 1950 for the restoration and possession  of the  five shops.  On March 14, 1963, the District  Rent  and Managing  Officer,  Jalalabad,  sent  a  memorandum  to  the Municipal Committee stating that the property in dispute had already  been transferred to the occupants and disposed  of’ under  the Compensation Act and that its assessed price  was Rs. 6,542.  In the memorandum it was further stated :               "It   is   not,   therefore,   expedient    or               practicable  to restore the above property  to               you  and  it-has, therefore, been  decided  to               transfer  you any other immovable property  in               the  compensation pool of the equal amount  in               lieu  thereof under section 20B of  the  D.Ps.               (C&R) Act, 1954." The memorandum also listed some properties which were avail- able  for transfer to the Municipal Committee.  This is  the memorandum that has been quashed by the High Court. The  above  proposal was not acceptable  ’Lo  the  Municipal Committee.  It was pointed out by the Municipal Committee in reply that it was incorrect that all the five shops had been transferred  and  that the assessment price was  Rs.  6,452. According  to the Municipal Committee only one shop  out  of these,  in  possession  of Dogar Mal  Ram  Chand,  had  been auctioned for Rs. 10,100 although the sale had not matured. It appears that one shop was released in favour of the Muni- cipal  Committee but the Department refused to  release  the other   shops.    After   unsuccessfully   approaching   the Settlement Officer, with delegate powers of the  Settlement Commissioner, the writ application under Art. 226 was filed in the High Court. In Kirpal Singh v. The Central Government(-) the High  Court had  held  that s. 20B of the Compensation  Act  was  uncon- stitutional being ultra vires Arts. 14 and 19 (1) (f) of the Constitution.   The High Court was, however, of the  opinion that this (1)  I.L.R. [1967] 2 P. & H. 574. 648 section did not violate Art. 31(2) of the Constitution.   As we  ’have come to the conclusion that S. 20B  violates  Art. 31(2) of the Constitution, we need not consider whether  the

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reasoning of the High Court is correct regarding the section being ultra vires Arts. 14 or 19(1) (f).  Section 20B is in the following terms               "20B. (1) Where any person is entitled to  the               restoration  of any property by virtue  of  an               order  made  by  the  Custodian-General  under               section  27 of the Administration  of  Evacuee               Property  Act,  1950,  or  by  the   competent               officer  or  the appellate officer  under  the               Evacuee Interest Separation Act, 1951, and the               Central  Government is of opinion that  it  is               not  expedient or practicable to  restore  the               whole  or  any part of such property  to  that               person  by  reason of the  property  or  part               thereof  being  in occupation of  a  displaced               person  or  otherwise,  then,  notwithstanding               anything  contained in the said Acts  or  this               Act,  it  shall  be  lawful  for  the  Central               Government :-               (a)   to  transfer to that person in  lieu  of               the  property  to  be  restored  or  any  part               thereof,   any  immovable  property   in   the               compensation  pool or any part thereof,  being               in  the opinion of the Central  Government  as               nearly  as  may be of the same  value  as  the               property  to be restored or, as the  case  may               be, any part thereof, or               (b)   to  pay  to that person such  amount  in               cash from the compensation pool in lieu of the               property  to be restored or part  thereof,  as               the  Central Government having regard  to  the               value  of the property to be restored or  part               thereof, may in the circumstances deem fit.               (2)   Where  in pursuance of  sub-section  (1)               any  person  has been  granted  any  immovable               property  from  the compensation pool  or  has               been   paid  any  amount  in  cash  from   the               compensation   pool,  his  right,  title   and               interest in the property to be restored  shall               be deemed to have been extinguished. Before  we deal with the constitutionality of this  section, we may briefly refer to its background.  This is set out in detail  by  this Court in Amar Singh v.  Custodian,  Evacuee Property, Punjab(1).  In brief, a number of steps were taken by  Government to rehabilitate the displaced persons  coming from  West Pakistan.  The first legislative measure  enacted to  achieve  this  purpose was  the  East  Punjab  Evacuees’ (Administration of (1)  [1957] S.C.R. 801.                             649 Property)  Ordinance, 1947.  Various other acts were  passed which  are set out at p. 809 of the above judgment.   It  is enough for the purposes of this case to consider the  effect of  the provisions of the Compensation Act and  the  Evacuee Act.  Under s. 7 of the Evacuee Act property was notified as being evacuee property, and under s. 8 the property declared to be evacuee property vested in the Custodian.  Under s. 9, the  Custodian  was  empowered to  take  possession  of  the property vested in him, and the Custodian was entitled under s.  10  to  administer,  preserve  and  manage  any  evacuee property.   In exercise of the powers he granted leases  and made  allotments out of the evacuee property, in  favour  of displaced persons. By 1954 it was decided that displaced persons should be paid compensation in respect of the property left by them in  the

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territories  now forming part of West Pakistan.   With  that end  in  view the Compensation Act was passed.   Section  12 enabled the Central Government to acquire property which had been declared evacuee property and vested in the  Custodian. After acquisition the title of the evacuee was  extinguished and  the evacuee property vested absolutely in  the  Central Government  free  from all encumbrances.  All  the  property acquired under this section formed part of the  compensation pool.   Cash balances lying with the Custodian  and  certain other  contributions  and  assets were also  thrown  in  the compensation  pool.  Elaborate rules were framed  under  the Compensation  Act for the purpose of paying compensation  to displaced persons out of the compensation pool.  One of  the ways of paying compensation was transfer of property. It  is  not  disputed that Lachhman  Dass  and  others  were granted salads under the Compensation Act and thus purported to acquire ownership rights in the shops. The  objects and reasons for enacting s. 20B were given  as. follows :               "Instances  have  come to  notice  where  some               properties were wrongly declared to be evacuee               property and they were also acquired.  In such               cases,  the  Custodian-General  is   empowered               under  section  27 of  the  Administration  of               Evacuee  Property  Act, 1950 to  restore  such               property to the non-evacuee owner.  Similarly,               a  competent officer has also power under  the               Evacuee  Interest  Separation  Act,  1951,  to               declare  a  share  in a property  to  be  non-               evacuee  after  the  whole  of  it  has   been               declared  to be evacuee property and has  been               acquired.   It  is not sometimes  possible  to               restore  the  original property  to  the  non-               evacuee  owner  because of its transfer  to  a               displaced person.  To overcome this               650               difficulty,  it  is proposed to insert  a  new               section 20-B on the lines of section 20-A." We may first analyse the provisions of s. 20-B.  It proceeds on  t he basis that the property to be restored had in  fact not properly vested in the displaced persons or the  Central Government.    Ordinarily,  the  rightful  owner  would   be entitled  to  have the property restored to  him.   But  the section  enables  the Central Government to deprive  him  of that  property  if  it  is of the opinion  that  it  is  not expedient or practicable to restore the whole or part of the property.  The section mentions one reason why it may not be expedient  or practicable, and that is that the property  is in  the occupation of a displaced person.  Even if  this  is assumed  to be an adequate reason, it makes it  almost  non- controlling  by  saying that any other reason will  be  good enough.   This is the only meaning we can give to  the  word "otherwise".  In other words, this means that if the Central Government  likes the property or its lessee or licensee  or transferee and it finds it irksome or does not want to annoy that  person  it  could deprive the rightful  owner  of  his property.   The  Central Government is  not  concerned  with justness  but  whether it would be politic  to  restore  the property.  If the Central Government has decided to  deprive the  rightful owner of the property it may transfer to  that person  any  property  being, again in the  opinion  of  the Central  Government, as nearly as may be, of the same  value as the property to be restored, but the section does not say value  at  what  point  of time; whether  at  the  time  the property  was  taken  possession of by  the  Custodian,  the

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Central  Government or the displaced person, or at the  time the  title  of  the rightful  owner  is  extinguished.   The section   further  gives  an  alternative  to  the   Central Government to offer cash from the compensation pool,  having regard  to  the  value  of  the  property.   Here  again  no indication is given whether the cash has to be equivalent to the full value of the property and no indication as to,  the point  of time at which value is to, be ascertained.   Under sub-s.  (2)  after the rightful owner has been  granted  any immovable  property from the compensation pool or  has  been paid any cash then his title is extinguished. It seems to us that the High Court was not right in  holding that  the  section  did  not  violate  Art.  31(2)  of   the Constitution  Art.  31(2) provides for two things;  (1)  the acquisition  or requisition should be for a public  purpose; and  (2) the law should provide for compensation and  either it  should  fix the amount of compensation  or  specify  the principles on which and the manner in which the compensation has to be determined or given. In  our view, S. 20B violates both these provisions  of  the article.    There   is  no  doubt  that   to   provide   for rehabilitation of displaced persons was a public purpose but it does not serve any 651 public  purpose to provide that if a displaced person is  in occupation  of  somebody’s property he should not  be  given other   property  because  it  will  not  be  expedient   or practicable to do so.  A public purpose may be served if  it had been provided that a displaced person may not be  ousted because  his  business would be ruined or that he  would  be completely  thrown  on  the street, but to  provide  in  the section  that  if the Central Government does not  think  it expedient or practicable for its own convenience or for  the convenience  of a lessee or licensee who is not a  displaced person it may not restore property serves no public purpose. In  our  view, under the section the Central  Government  is entitled  not to restore property to serve a  purpose  other than a public purpose and consequently the section is ultra vires Art. 3 1 (2). Further,  in our opinion, the section does not fix any  com- pensation or lay down any principles for compensation.  Sub- s.  (1)  (a) of s. 20B may perhaps be taken as  laying  down some  principle, namely, that the value should be  the  same but  it  does not prescribe the point of time at  which  the value  is to be ascertained.  In sub-cl.(b) nothing is  said about the cash being equivalent to the value of the property which is sought not to be restored.  The Central  Government might,  having regard to the value of the  property,  decide that  cash to the extent of 50 per cent of its value  should be  paid.   In doing this it would be having regard  to  the value  of  the property but it would  be  following  another rule,  namely, that the cash should be half of the value  of the property which is laid down in the section. We  are  quite aware that the Central Government  was  faced with the problem mentioned in the "objects and reasons"  set out  above,  and  this problem had to be  tackled,  but  the problem should and can be tackled in accordance with law and the Constitution. It  was  sought to be argued before us that Art.  3  1  (2A) applied in this case, but it seems to us that insofar as the property  was   still part of the  compensation  pool  the effect  of the extinguishment of the title of  the  rightful owner  would  be  to  vest  the  property  in  the   Central Government.   It may be that insofar as the title vested  in the  displaced  person the case would come  within  Art.  31

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(2A), but then the section is not severable and it has to be declared  void as a whole.  We need not consider  the  point that  even  if the section is severable, it  would  be  void under Art. 19 ( 1 ) (f).  The points we have mentioned above would also be relevant in considering the reasonableness  of the restrictions. We  may  mention  that  the learned  counsel  on  behalf  of Lachhman Dass and others, the displaced persons to whom  the shops had been purported to have been transferred under  the sanads,  tried  to attack the validity of the order  of  the Custodian- 652 General  under s. 27 of the Evacuee Act on the  ground  that they  were not heard.  This point was not taken in the  High Court and we cannot allow it to be raised before us at  this stage. In the result the appeals fail and are dismissed with costs; one hearing fee. R.K.P.S. Appeals dismissed. 653