Case: Fazal Bhai Dhala Vs. Custodian-General Of Evacueeproperty, Delhi

2. The appellant Fazal Bhai Dhala and his brother Abdulla Dhala were partners in a business of hides and skins. A deed of partnership was executed on January 1, 1941, and the firm was registered in the Register of Firms, Cuttack, under S. 59 of the Indian Partnership Act. On August 10, 1949, Abdulla Bhai Dhala executed a deed of sale in respect of some immovable properties at Jharsuguda in Orissa, and also certain properties, at Madras, in favour of Fazal Bhai Dhala. The consideration in the document was mentioned as Rs. 85,000/- of which Rs. 50,000/- was mentioned as the value of the Madras properties and Rs. 35,000/- as the value of the Orissa properties. The sum of Rs. 85,000/- appears to have been paid in the presence of the Registrar by Fazal Bhai to Abdulla Bhai on August 11, 1949. A deed of dissolution of the partnership was also executed on the following day-the 12th August, 1949. It was stated therein that the two partners had agreed "that the said partnership shall stand dissolved as and from 2-11-48 and it has further been agreed that as from that day, 2-11-1948, the said business of Fazalbhoy Dhala and Co., shall belong to and be continued and carried on by Fazalbhoy Dhala." It was also stated that in view of fact that "accounts of the said partnership have not yet been taken or settled and cannot be taken or settled without much delay and trouble it has further been agreed that Fazal Bhai Dhala shall pay to Abdulla Dhala a sum of Rs. 40,000/- in full settlement and satisfaction of all the claims, as partner of Abdulla Bhai Dhala against the partnership, its assets,. goodwill etc., in respect of his share therein." A Receipt of the sum of Rs. 40,000/- was also acknowledged in this deed. On receipt of information that Abdulla Dhala had migrated to Pakistan after transferring his properties to his brother Fazal Bhai Dhala, the Assistant Custodian of Evacuee Property, Sambalpur (Orissa), issued a notice under S. 7(1) of the Ordinance XXVII of 1949 to Fazal Bhai Dhala on December 30, 1949, in respect of immovable properties at Jharsuguda including the properties covered by the sale deed of August 10, 1949, and the business in hides and skins under the name of Fazalbhoy Dhala and Co., and certain immovable properties standing in the name of that firm. In reply to the notice, Fazal Bhai contended that Abdulla Bhai was not an evacuee; and that in any case, he, Fazal Bhai, had become the sole proprietor of the business, with all assets and liabilities, with effect from November 2, 1948, when the partnership was dissolved and that while some of the immovable properties as mentioned in the notice had been conveyed to him by a deed of sale by Abdulla Bhai, the rest being assets of the firm of Fazal Bhai Dhala had vested in him after the dissolution of partnership, he prayed that his "title" in the assets of the firm, and in the immovable properties, mentioned in the notice should be confirmed. The Assistant Custodian held after consideration of the evidence that though the transfer of the properties mentioned in the sale deed was for adequate and valuable consideration it was not at all bona fide: as regards the other properties and the hides and skins business itself the Assistant Custodian held that Abdulla Bhai had no interest as the partnership had been dissolved on November 2, 1948. Against this decision Fazal Bhai appealed to the Custodian and prayed that the order of Assistant Custodian as regards the properties mentioned in Schedule "A" (1) and (II) mentioned in the notice under sub-section (1) of S. 7 of the Government of India Ordinance No. XXVII of 1949 should be set aside. The Custodian agreed with the Assistant Custodian, in respect of these properties, and held that these had been rightly declared as evacuee properties. He went further and held that there was no justification for the Assistant Custodian taking a different view as regards the other properties. His conclusion was that "in fact, with regard to these properties also the same amount of mala fides was present and as such these should also be included in the list of evacuee properties"; and that "it is but proper that the entire 8 annas share of the properties mentioned in Schedules A and B of the evacuee Abdulla should be treated as evacuee properties." The Custodian finally ordered: "in consequence of my above decision according to S. 6 of the Evacuee Interest Separation Act, the entire properties in Schs. A and B should now be treated as evacuee properties and revised action should be taken to notify as such under S. 7(3) of the Administration of Evacuee Property Act and the appellant be directed to get his 8 annas share in the properties separated in the Court of the Competent Officer."3. Fazal Bhai moved the Custodian-General of India for revision of this order of the Custodian, Orissa. The Custodian-General however refused to interfere.4. It is proper to mention at the outset that it is not longer disputed that Abdulla Bhai is an evacuee, though the exact date from which he became such an evacuee does not clearly appear from the record, and that all the immovable properties, which are the subject-matter of the appeal, were the assets of the firm Fazallabhai Dhala and Co.

Court's reasoning:
it is clear that the only jurisdiction the Custodian could exercise, in the absence of any appeal against that portion of the Assistant Custodians order would be his revisional jurisdiction under S. 26. When we find that the custodian has made the order it is proper and reasonable to hold that he passed it in the exercise of the only jurisdiction he had-viz., the revisional jurisdiction and the fact that this was not clearly stated in the order can be no ground for holding that he was not exercising revisional jurisdiction. It is quite another matter whether in the exercise of that jurisdiction, he proceeded in accordance withgoes without saying that in the large majority of cases the Custodian will, in order to give the party concerned a reasonable opportunity of being heard, first give him a notice of his intention to examine the records to satisfy himself as to the legality or the propriety of any order passed the subordinate officer and require such person to show cause if any why the order should not be revised or modified, and then if and when the party appears before him in response to the notice, the Custodian has also to allow him, either personally or through counsel, a reasonable opportunity of being heard. In suitable cases it may be proper and necessary for the Custodian to allow the party concerned even to adduce evidence. There may be cases however where the party concerned is already before the Custodian, so that all that is necessary for the Custodian to do is to inform such party of his intention to examine the records to satisfy himself whether a particular order should be revised, and then to give him a reasonable opportunity of being heard. There would be no necessity in such a case to serve a formal notice on the party who is already before the Custodian and the omission to serve the notice can be of no consequence. What the law requires is that the person concerned should be given a reasonable opportunity of being heard before any order prejudicial to him is made in revision. If this reasonable opportunity of being heard cannot be given without the service of the notice the omission to serve the notice would be fatal; where however proper hearing can be given without service or notice, it does not matter at all, and all that has to be seen is whether even though no notice was given a reasonable opportunity of being heard wasthe fact of dissolution is accepted the declaration as regards the business must necessarily be construed as a declaration that the property that remained in Abdulla Bhai on the dissolution of the firm was an evacuee property. It seems to us clear that that was really what is intended to be meant by the order made by theregards the deed of dissolution itself it is wholly beside the point whether Abdulla Bhai could have resisted the claim to wind up for the declaration merely is that Abdulla Bhais share in the dissolved partnership as it stood on the date of dissolution is an evacuee property. The validity of the dissolution is not touched. It is hardly necessary to add that the dissolution of the partnership did not by itself mean that Abdullas share stood transferred to Fazal Bhai any more than that Fazal Bhais share stood transferred to Abdulla Bhai. A purported transfer of Abdullas share was made by the deed itself. But this having been held to be without good faith, had in view of S. 40 of the Evacuees Property Act , no effect. It has to be made clear that the Custodian would not be bound by the statements made in the deed of dissolution as regards the settlement of the accounts of the firm and that the Custodian, in whom the evacuee properties vest will have in respect of the dissolved business all the rights which Abdulla had under sections 37, 46, 47, 48 and other sections of the Partnershiplegal position after the amendment therefore is that it is only the 8 annas share of Abdulla set out in the Schedule in the Assistant Custodians order dated the 28th January, 1950, which is evacuee property., It is therefore necessary to state in clarification of the position that instead of the entire Schedules A and B properties being treated as evacuee property only 8 annas share of these properties which belonged to the evacuee Abdulla should be treated as evacueehas to be borne in mind that the purported dissolution of the firm in November, 1948, the settlement of accounts recorded in the deed of August, 1949 and the transfer of properties effect were all integral and indivisible parts of the same transaction. While it is true that the notice issued to Fazal Bhai made no reference to the deed of dissolution, it is clear from Fazal Bhais own statement filed in response to this notice that he clearly understood that the revising authority would be considering the question of bona fides in respect of the numerous statements about the settlement of accounts in connection with the dissolution of business made in the deed of dissolution.We are satisfied therefore that the appellant Fazal Bhai had reasonable opportunity of being heard as regards the bona fides of the transactions mentioned in the deed of dissolution. As we have already mentioned in connection with the other appeal, the fact that the firm stood dissolved with effect from the date on which the deed of dissolution was executed can no longer be disputed. The effect of the Custodians order in regard to the deed of dissolution merely is that the transactions mentioned in that deed on the purported basis of an earlier dissolution has been declared to be not bona fide and confirmation was refused of whatever transfers of properties were purported to have been effected by that deed.