Case: Rabia Bai Vs. The Custodian-General Of Evacueeproperty

any time after the transfer, the transferer becomes an evacuee within the meaning of S. 2, or the property of the transferer is declared or notified to be an evacuee property within the meaning of the Act, unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act. It would thus be clear that all transfers made after the 14th day of August, 1947, but before the 7th day of May, 1954, are hit by this section, and that obviously would bring within the mischief of the section a large number of transfers effected at a time when no evacuee law was in force in respect of them. Reading S. 40 (a) and (4) together it appears that the transfers hit by the former provision would be valid only if they are confirmed under the latter provision. It is possible that a transfer made during the prohibited period may have been entered into in good faith or was for valuable consideration and did not attract any of the provisions contained in cls. (a), (b) and (c) of S. 40 (4). In such a case merely because it was effected within the prohibited period it would not become void and the Custodian may have to confirm it; but where such a transfer attracts the provisions of S. 40 (4) (a) for instance, it would not be affirmed and it would remain inoperative. This shows that the main object of the Act was to preserve the property of persons who had migrated to Pakistan till the Government of India could come to some understanding with the Pakistan Government in regard to adjustment of claims of Indian evacuees in respect of the properties left by them in Pakistan. The idea then presumably was that the two Governments should agree on the valuation of the evacuee properties left by evacuees in the two respective countries and the difference in the said valuation should be amicably adjusted between them. After such adjustment was made it was intended to compensate the evacuees in regard to the loss incurred by them in respect of the properties left by them in the two respective countries. That this intention did not succeed is another matter. There can, however, be no doubt about the policy and object of the Act, and in determining the content of the expression "good faith" in the context of the main provision of S. 40 (1) this object and policy of the Act must be borne in mind. 11. Section 40 (4) refers to three kinds of cases where the transfer may not be confirmed; cl. (a) deals with transactions which are not entered into in good faith or for valuable consideration; cl. (b) deals with transactions which are prohibited under any law for the time being in force; and cl. (c) deals with cases of transactions which are not confirmed for any other reason. It would thus be seen that the scope of the three clauses is very wide. It is not only transactions prohibited under any law that fall within the mischief of S. 40 (4); but transactions which are not entered into in good faith or for valuable consideration also fall within its mischief. Now, if the test prescribed by S. 3 (22) of the General Clauses Act as interpreted by Mr. Sastri is held to be relevant a large number of transactions may have to be confirmed even though they are shown to have been deliberately entered into with the object of evading the provisions of S. 40 (1). In our opinion, the fact that the evacuee law had not been extended at the relevant time to Madras would not be decisive in the matter. It was well known that the said law was being extended from Province to Province as it was deemed necessary, and indeed the letter written by the vendor to Mohideen clearly shows that the vendor knew as much. The history of the evacuee laws passed in several States and by the Central Government and Legislature from time to time shows that the Legislatures were attempting to meet with an unprecedented problem, and the laws passed by them in India and Pakistan at the material time made it perfectly clear to the evacuees from both the countries that the two countries were adopting appropriate legislative measures to protect the evacuee properties and prevent their transfers. Therefore, if a vendor sold his property not for any necessity or for any other legitimate purpose but solely with the object of converting it into cash and removing it to Pakistan, that clearly was intended to defeat the provisions of the Act which he knew would soon be extended to Madras, and so it would be difficult to hold that he was acting honestly within the meaning of S. 40 (4) (a) of the Act. An intention to defeat the provisions of the Act cannot be said to be honest in the context. If despite his intention to defeat the application of the Act a transaction is upheld as entered into in good faith many transactions may escape the application of S. 40 (1), and that clearly would defeat the purpose of the Act. It is significant that though the provisions of S. 40 (1) are drastic they have been deliberately made retrospective, and that emphatically brings out the aim and object of the Act; and it would be unreasonable to ignore this aim and object of the Act in construing the expression "good faith" in in S. 40 (4) (a).We would, therefore, hold that having regard to the aim and object of the emergency legislation with which we are concerned in the present case the expression "good faith" used in S. 40 (4) (a) has been properly construed by the respondent when he held that a deliberate intention to defeat the apprehended application of the evacuee law which was responsible for the transfer in question brings the transfer within the mischief of S. 40 (4)(a).

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]8. It is clear that if a transaction is affected by absence of good faith either in the vendor or the vendee its confirmation may properly be rejected under S. 40 (4) (a); in other words, good faith is required both in the vendor and the vendee. In that sense the provisions of S. 40 (4) (a) are more rigorous and stringent than those of S. 53 (1) of the Transfer of Property Act. Under the latter section which deals with fraudulent transfers the rights of a transferee in good faith and for consideration are expressly protected; that, however, is not the position under S. 40 (4) (a). Therefore, the fact that the appellant paid valuable consideration for the transaction and is not shown to have acted otherwise than in good faith entering into the transaction would not justify her claim for confirmation of the said transaction if it is shown that the vendor had not acted in good faith in entering into the said transaction. The fact that consideration was paid by the appellant and that she was acting in good faith may perhaps be relevant in determining the character of her conduct in regard to the transaction; but it would not be relevant or material in determining the character of the conduct of the vendor in relation to the transfer. This position is not seriously disputed before usWe do not think we can attach much importance to the argument that even where the evacuee law applied confirmation of sale transactions was intended to be automatic subject to the satisfaction of the two conditions specified in the Press Note. We are bound to assume that the question about confirming sale transactions was required to be, and was in fact, dealt with by the appropriate authorities under the relevant statutory provisions which were in force at the material time. It is, however, true that no evacuee law had been extended to Madras at the time when the impugned transaction was completed, and that naturally raises the question as towhether if a transaction had been entered into deliberately and consciously with the object of evading the application of evacuee law which it was apprehended would soon be extended to Madras, does that fact attract the provisions of S. 40 (4) (a) of the Act?As we have already indicated the respondent has answered this question in the affirmative, and Mr. Sastri contends that this conclusion is erroneous in lawIt would thus be clear that all transfers made after the 14th day of August, 1947, but before the 7th day of May, 1954, are hit by this section, and that obviously would bring within the mischief of the section a large number of transfers effected at a time when no evacuee law was in force in respect of them. Reading S. 40 (a) and (4) together it appears that the transfers hit by the former provision would be valid only if they are confirmed under the latter provision. It is possible that a transfer made during the prohibited period may have been entered into in good faith or was for valuable consideration and did not attract any of the provisions contained in cls. (a), (b) and (c) of S. 40 (4). In such a case merely because it was effected within the prohibited period it would not become void and the Custodian may have to confirm it; but where such a transfer attracts the provisions of S. 40 (4) (a) for instance, it would not be affirmed and it would remain inoperative. This shows that the main object of the Act was to preserve the property of persons who had migrated to Pakistan till the Government of India could come to some understanding with the Pakistan Government in regard to adjustment of claims of Indian evacuees in respect of the properties left by them in Pakistan. The idea then presumably was that the two Governments should agree on the valuation of the evacuee properties left by evacuees in the two respective countries and the difference in the said valuation should be amicably adjusted between them. After such adjustment was made it was intended to compensate the evacuees in regard to the loss incurred by them in respect of the properties left by them in the two respective countries. That this intention did not succeed is another matter. There can, however, be no doubt about the policy and object of the Act, and in determining the content of the expression "good faith" in the context of the main provision of S. 40 (1) this object and policy of the Act must be borne in mindTherefore, if a vendor sold his property not for any necessity or for any other legitimate purpose but solely with the object of converting it into cash and removing it to Pakistan, that clearly was intended to defeat the provisions of the Act which he knew would soon be extended to Madras, and so it would be difficult to hold that he was acting honestly within the meaning of S. 40 (4) (a) of the Act. An intention to defeat the provisions of the Act cannot be said to be honest in the context. If despite his intention to defeat the application of the Act a transaction is upheld as entered into in good faith many transactions may escape the application of S. 40 (1), and that clearly would defeat the purpose of the Act. It is significant that though the provisions of S. 40 (1) are drastic they have been deliberately made retrospective, and that emphatically brings out the aim and object of the Act; and it would be unreasonable to ignore this aim and object of the Act in construing the expression "good faith" in in S. 40 (4) (a).We would, therefore, hold that having regard to the aim and object of the emergency legislation with which we are concerned in the present case the expression "good faith" used in S. 40 (4) (a) has been properly construed by the respondent when he held that a deliberate intention to defeat the apprehended application of the evacuee law which was responsible for the transfer in question brings the transfer within the mischief of S. 40 (4)(a).