Case: N. S. Gujral Vs. Custodian Of Evacuee Property &amp; Anr

1. The appellant obtained a decree for over Rs. 41,000 against Modern Electric Iron and Brass Works, Delhi which was the property of two partners, namely, Mohd. Sabar and Noor Mohd. Butt, in January 1950. He also obtained another 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 1950-Act). Under Section 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.2. 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 futher directed the appellant to go to the civil court to get 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 as 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.3. 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 Section 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 Section 12 of the 1954 Act were ultra vires.4. 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 plea that the notification and Section 12 of the 1954-Act were ultra vires had not been decided. When the suit went back for re-trial on his issue, the appellant applied for transfer under Article 228. 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 Sec. 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. Clause (m) of Section 10(2) was amended as ultra vires. Reliance in this connection was placed on Article 19 of the Constitution and also on Article 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.

Court's reasoning:
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 Sec. 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 Section 12. But section 12 does not in our opinion interfere with the appellants 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 Section 12 of the 1954-Act did not in any way affect the appellants right to acquire hold and dispose of his property. In the circumstances, the appellant cannot claim protection under Article 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 Article 19 (5).We therefore agree with the High Court that the appellant cannot claim that Section 12 is ultra vires Article 19 (1) (f) and therefore the notification made thereunder affects his fundamental right to acquire, hold and dispose of property.r the argument that Sec. 12 is bad under Article14 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 Section 12 of the 1954-Act; and this amounts to discrimination under Article 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 Section 12 by which the property of evacuees in India is to be utilised for such rehabilitation. There is therefore no infringement of Article 14 in the circumstances.11.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 Section 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 Section 10 (2) (n) read with Sec. 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 Section 10 (2) (n) read with Section 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 vested in the Central Government by some notification in 1968 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 section 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.