TaxTMI 
TaxTMI 
TaxTMI 
1951 (4) TMI 27
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....Section 6 (1) also relating to the property of the second petitioner. On 6th December 1949, the second petitioner appealed to the Additional Custodian under Section 24 of Ordinance No. XXVII [27] of 1949 which had replaced the Bombay Act on 18th October 1949. This appeal was heard by the Custodian on 2nd March 1950, and on 3rd March 1950, the Custodian directed that notices be issued to the shareholders of the second petitioner company. These notices were issued in exercise of the powers of revision conferred upon the Custodian under Section 26 (1) of Ordinance No. XXVII [27] of 1949. These notices called upon the shareholders to show cause why orders should not be passed declaring them evacuees under Clauses (i), (ii) and (iii) of Section 2 (d) of the Ordinance and all their property be declared evacuee property. On 28th March 1950, an order was passed by the Custodian on the appeal preferred by the company holding that the orders of the Custodian and the Deputy Custodian were bad and those orders were set aside. On 28th March 1950, a notification was issued by the Custodian under Section 7 (3) of the Ordinance and by this notification the Custodian notified the evacuee properties....
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....herewith." Then Section 2 of the Ordinance deals with definitions, and the important definition is one of an "evacuee.'' The definition falls under three parts. The first part deals with a person who, on account of the setting up of the Dominions of India and Pakistan or on account of civil disturbances or the fear of such disturbances, leaves or has, on or after 1st March 1947, left, any place in a province for any place outside the territories forming part of India. The second category consists of any person who is resident in any place now forming part of Pakistan and who for that reason is unable to occupy supervise or manage in person his property in any part of the territories to which this Ordinance extends, or whose property in any part of the said territories has ceased to be occupied, supervised or managed by any person or is being occupied, supervised or managed by an unauthorised person. And the third category consists of persons who have, after 14th August 1947, acquired by way of allotment or by means of unlawful occupation or other illegal means any right to, interest in or benefit from any property which is treated as evacuee or abandoned property....
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....ian, and the important ones to notice are those under Sub-clause (1) which provides that where the property vesting in the Custodian consists of share or shares in a company, the Custodian, notwithstanding anything to the contrary contained in the Companies Act or the articles of association of the company, may exercise the same rights in the matter of making a requisition for the convening of a meeting as the evacuee share-holder himself would have done. Therefore, in effect, under this Sub-clause the rights of the share-holder for the purpose of convening a meeting are made exercisable by the Custodian in whom the shares have vested, and it is under this power that the Custodian issued the requisition which has been challenged in this petition. Then Sub-clause (n) gives the power to the Custodian to pay to the evacuee or to any member of his family or to any other person as in the opinion of the Custodian is entitled thereto, any sums of money out of the funds in his possession ; and Sub-clause (c) empowers him to transfer in any manner whatsoever any evacuee property, notwithstanding anything to the contrary contained in any law or agreement relating thereto. Then Section 13, Su....
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....er this sub-section prejudicial to any person without giving such person a reasonable opportunity of being heard. Similar powers of revision are also vested in the Custodian General under Section 27. Section 28 makes the orders passed final and declares that they shall not be called in question in any Court by way of appeal or revision or in any original suit, application or execution proceeding. Chapter VI deals with penalties and procedure. Chapter VII deals with miscellaneous matters, and Section 43 bars the jurisdiction of civil Courts in certain matters, and by Sub-clause (c) no Court shall have jurisdiction to question the legality of any action taken by the Custodian General or the Custodian under this Ordinance. Section 53 confers power upon the Central Government to make rules to carry out the purposes of the Ordinance. 3. Now looking to the various provisions of this Act, it is clear that the object and purpose of the Legislature in enacting this Ordinance was to deal with the custody, management and administration of evacuee property. The evacuee was to be prevented from exercising any rights as an Owner in respect of his property, and the property was to vest in the Cu....
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....matter of the petition are quasi-judicial orders and that the Custodian in passing those orders was exercising quasi-judicial functions. Therefore, if those orders were in excess of jurisdiction or were passed in violation of the fundamental principles of justice, then those orders could be corrected by the issue of a writ of certiorari by this Court. In this connection it is also necessary to bear in mindArticle 226 of the Constitution. That article not only confers wider powers upon the High Courts, but also declares the powers already enjoyed by the High Courts. But Article 226 in declaring the powers of the High Court and making those powers a part of the Constitution has placed those powers beyond the challenge of the Legislature. Whereas before the enactment of the Constitution the powers of the High Court to issue various writs could have been affected or modified by the appropriate Legislature, now inasmuch as these powers are embodied in the Constitution and form part of the Constitution they cannot be altered or affected by any legislation. It would only be by means of the amendment of the Constitution that these powers of the High Court could be in any way touched. There....
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....ginal jurisdiction in any matter concerning the revenue or concerning any act ordered or done in the collection thereof according to the usage and practice of the country or the law for the time being in force; and what was held by the Division Bench, following a long line of authorities of the Privy Council, is that even though a revenue officer may act contrary to the law, if his action is based upon an erroneous view of what the law is and that view is arrived at bone fide, then his action cannot be challenged on the Original Side of the High Court although it is not an action according to law; and the argument based by Mr. Seervai on this decision is that although the action of a revenue officer may be without jurisdiction in being contrary to law, still that act cannot be challenged in a civil Court by reason of Section 226 which ousts the jurisdiction of the High Court. Now in the first place, Section 226 does not make the orders of the revenue officer final in the sense in which the orders of the Custodian are made final under the Ordinance, but it expressly excludes the jurisdiction of the High Court to deal with revenue matters, and as pointed out by Rangnekar J., in Dewar....
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....n 18-8-1949, being Act IV [4] of 1949, by which a new entry was added in the Concurrent List, being entry 31 (B), and that entry was to the following effect : "Custody, management and disposal of property including agricultural land declared by law to be evacuee property," and the competency of the Legislature to enact the Ordinance must be in the first instance decided with reference to this entry. What is contended by the petitioner is that it is only with regard to property which is declared by law to be evacuee property that the Legislature had the competence to legislate with regard to custody, management and disposal of that property. But what is urged is that there is no entry in any of the parts of Schedule 7 which entitles the Legislature to pass any law declaring any property to be evacuee property. It is well settled that in construing the various entries in the schedules a large and liberal interpretation must be placed upon them. Further, in order that the power conferred upon the Legislature should be effective, the Courts must assume that all ancillary and subsidiary power necessary for the purpose of legislating upon the main topic referred to in the entri....
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....nt List or if not specifically enumerated in the first List, would undoubtedly fall in entry 97 to which I have just referred. With that legislative competence Parliament by Section 58 of this Act repealed the Ordinance No. XXVII of 1949 and in repealing the Ordinance it provided: "The repeal by this Act of the Administration of Evacuee Property Ordinance 1949 (XXVII [27] of 1949) shall not affect the previous operation thereof, and subject thereto, anything done or any action taken in the exercise of any power conferred by or under that Ordinance shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act, as if this Act were in force on the day on which such thing was done or action was taken." It is not disputed that Parliament had the power to validate orders passed under the Ordinance even though the Legislature had no legislative competence to pass the Ordinance. The only question is whether in enacting this section Parliament has exercised their power. On the one hand it is contended that the object of this section was not to validate orders which were ultra vires or illegal. On the other hand, it is contended that the....
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....ament here. All that the Provincial Legislature enacted in the case before the Full Bench was that the orders and notifications passed under the old Act shall be deemed to have been passed under the new Act and the Legislature stopped there, whereas here the Legislature has gone much further and has given, as it were, a retrospective effect to a piece of legislation which it was passing and has in terms provided that any orders previously passed must be judged with reference to the subsequent legislation and not in reference to the legislation in existence at the time when the orders were passed Therefore, in my opinion, the Full Bench decision, on which Mr. Maneksha relies, does not help us to construeSection 58 of the Act which is in very different language from the language of the amending Act in the Full Bench case. 9. I should also like to say that I do not find myself in agreement with the view taken by Bhagwati J. in Sir Currimbhoy Ebrahim v. M.B. Meher, Misc. No. 123 of 1950(Bom ) with regard to the interpretation of entry 8 in List III. It was contended, although it is not wholly necessary to consider it now, that both the Bombay Act and the Ordinance may be justified wit....
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....e competence in the Legislature, whether by reason of entry 31 (B) or by reason of Section 58 of Act XXXI [31] of 1950. 11. The next question--and that is a question of considerable importance--is whether this Act or any of its provisions violate any of the fundamental rights of the subject, and what is urged on behalf of the subject is that the legislation when considered as a whole and when its true purport is understood does violate the rights to property guaranteed by the Constitution. The rights to property are guaranteed by Article 19 and Article 31. Article 19(1)(f) guarantees to all citizens the right to acquire, hold and dispose of property. Article 81 guarantees certain rights to all persons residing in India, whether they are citizens or not. Sub-clause (1) of Article 81 precludes the deprivation of property of any person save by authority of law, and Sub-clause (2) introduces the principle that no property shall be taken possession of or acquired except on two grounds, one, that the acquisition or taking possession of must be for a public purpose, and the other that compensation should be paid for the property taken possession of or acquired. It may be noticed that as ....
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....n of property nor extinguishment of title. There is only a prohibition against the owner from exercising his rights of ownership until at a future indefinite date Parliament in its wisdom decides what is to happen to his property and what is to happen to his rights as an owner. Mr. Seervai contended that the effect of the legislation was a temporary extinguishment of the title of the evacuee and according to him there is no reason why we should interpret Article 31(1) as referring only to permanent extinguishment of title and not to temporary extinguishment. Now in the Sholapur case, (53 Bom. L. R. 218) to which I have just referred, the division bench pointed out that Article 31(1) reproduced the principle well understood and well established in American law of police power, and Article 31(2)represented the principle of eminent domain. But even in America, the line between the two is extremely difficult to define and Judges and Courts have differed from time to time as to whether a particular case falls on one side of the line or the other. The power given to the State UnderArticle 31(1) is a very drastic power, but, as we again pointed out in the Sholapur case, it is a power whic....
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....ce to the liability of the State to pay compensation under Article 31(2). But when we are dealing with evacuee property we have a specific provision in Sub-clause (5) of Article 31 which provides that nothing in Clause (2) shall affect the provisions of any law which the State may hereinafter make in pursuance of any agreement entered into between the Government of the Dominion of India or the Government of India and the Government of any other country, or otherwise, with respect to property declared by law to be evacuee property. Therefore, the effect of this provision is that if the Indian Government takes possession of any property declared by law to be evacuee property, then the conditions laid down in Article 31(a) for the valid taking of such possession would not apply. In other words, the Legislature may pass a law for taking possession of evacuee property without providing for compensation and without such taking possession of being for public purposes. 14. Now, when one interprets a Constitution, it is permissible--nay, it is even obligatory--to bear in mind legislative history, and we cannot overlook the fact that when the Constituent Assembly was enacting the Constituti....
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....legislation for the promotion of public health or the prevention of danger to life or property. In that case also nothing in Clause (2) shall affect legislation in regard to the subject. Therefore, you may have a case where the State may take possession of the property for promotion of public health or the prevention of danger to life or property without making beneficial use of the property and temporarily suspending the rights and title of the owner. If Mr. Seervai's contention were right, it would be difficult to put such a case either under Article 31(1) or Article 31(2). Therefore, although it is true that a division bench of this Court did place a certain interpretation upon the expression "taking possession of" used in Article 31(2), that interpretation was placed in the particular context of the facts to be decided in that case, and it would be erroneous to take the view that that is the only interpretation of this expression under any circumstances that may arise and that may have to be considered by the Court. In this particular case we are assisted in the interpretation we are putting upon the expression "taking pos session of" by the view which w....
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.... I hope it will never be suggested that the Courts constitute a third chamber, and it can exercise a power of veto upon the Legislature. When I said that the principle underlying the legislation and the objective is a matter for the consideration of the Legislature, I said this with this important qualification that that principle and that objective must not in itself be in violation of any fundamental right conferred upon the citizen. One may well imagine cases, though they are extremely rare where the very object with which the Legislature launches upon a particular legislation may be opposed to the fundamental rights conferred by the Constitution. But if the principle underlying the legislation and its object are constitutional, then it is not for the Court to question the policy underlying that legislation. It is not for the Court to sit in judgment upon what the Legislature has decided and to weigh the pros and cons of the policy which led the Legislature to pass a particular legislation. Further, any restrictions upon the fundamental rights of the subject which are necessary for effectuating the object and purpose of the legislation must be considered to be reasonable restric....
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....en consider the purpose that the Legislature has in view, and if we find that there is a reasonable relation between the former and the latter, then any restrictions imposed by the provisions of the legislation must be held to be reasonable. But if there is no relationship between any provision of the Act and the purpose in view, then, if those provisions contain any restrictions, the restrictions would not be reasonable. Approaching that question from that angle, we have got to look at the purpose in view of the Legislature in in enacting the Ordinance and the Act dealing with evacucees and evacuee property and taking the purpose in view we have got to study the various provisions to see whether those provisions contain any restrictions which are not related to the purpose in view. 19. Now, the Evacuee Ordinance and the Act is the result of one of the most unfortunate and tragic chapters in the history of our country and one cannot altogether divorce oneself from past history which led up to the passing of this Act. When partition came there was migration of large populations from our country to the Dominion of Pakistan and vice versa. People fleeing from Pakistan left property b....
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....concerned the apprehension on the part of the petitioner is perhaps not wholly justified, because we take it that the expression "resident" used in this sub-clause must connote a certain amount of permanency. A mere temporary abode in Pakistan on legitimate business or occupation would not make a person a resident for the purpose of this sub-clause. Then with regard to Sub-clause (iii) no serious 'objection is taken to that definition, because if a person in India wishes to benefit out of the distress of people who have left Pakistan and left property behind, he should have no grievance if he is treated as an evacuee and his property is taken away. It is also pointed out that although a particular act on the part of a citizen was perfectly legal and valid and he did not then know what the consequences of such an act might be, by reason of the Ordinance retrospectively his status and his property is endanger-ed by reason of something that he did in the past which when he did it was perfectly innocent. There is some force in this criticism, but, as I said before, no one anticipated what would happen after 14-8-1947, and in view of the events that took place our Legislat....
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....er given to the Custodian and which deprives the evacuee of the right of dealing with his. own property, surely the power of disposal must be given to the Custodian if the power of administration, custody and possession has to have any meaning or significance. This is not an independent power given to the Custodian in derogation of the title of the evacuee, but it is given as ancillary to the main purpose of the Act which is for the administration of evacuee property. Attention is also drawn to Section 13 and it is urged that the effect of this section is to prevent an evacuee from acquiring any property in future and therefore is in violation of the fundamental right guaranteed under Article 19(1)(f). It is perfectly true that even though a case may fall under Article 31(2) and it may be a case of possession being taken, that would not affect the right of the subject under Article 19(1)(f) to acquire property in future. Article 31(2) can only deal with property in possession of the citizen which has been taken away under a valid piece of legislation. But whether the citizen should be prevented from acquiring property in future must be dealt with independently of any consideration ....
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....tence, if he is so advised, on the ground that the particular section under which he was prosecuted and convicted was in violation of any fundamental rights guaranteed to him by the Constitution. Hardship has also been pointed out with regard to people who have now settled down in Bombay as citizens of the State whose property has been taken away and who have no wherewithal to sustain themselves. Mr. Seervai rightly points out that there is a provision in Section 10 (2) (n) which empowers the Custodian to pay to the evacuee or to any member of his family or to any other person, as in the opinion of the Custodian is entitled thereto, any sums of money out of the funds in his possession. These are powers similar to powers that a Court of law has which administers any particular property or estate which comes before it. The Custodian under this Act is also administering evacuee property. He must not forget that he is not the owner and the rights of ownership in the evacuee have not been extinguished by this Act. Therefore the law rightly provides that while he is administering the property he should make proper provision for the maintenance of those whose property has been taken away ....
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....of describing a class of citizens as evacuees who have no connection whatever with the connotation that must apply to the expression "evacuee." There must be some connection between the idea conveyed by the expression "evacuee" and the class of citizens whom Parliament declares to be evacuees. To that extent, undoubtedly, there is a limitation upon the legislative competence of Parliament. In this connection, I should like to point out that I have never been considerably impressed by the argument that Parliament or State Legislatures have been given very wide powers under the Constitution. People are apt to forget that there is no limitation whatever on the powers of British Parliament and the British Parliament can legislate on any subject under the sun. It is never suggested in England that the possession of power need necessarily lead to the abuse of power. There is always public opinion, and I hope enlightened public opinion, to control the power which Constitution has conferred upon Parliament. But it would be a dangerous conclusion and an entirely unjustifiable conclusion to restrict or limit the powers of a sovereign Legislature by considering what abase ....
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.... it was not competent to the Custodian, while exercising his appellate powers under Section 26 (1), to proceed against the property of a party who was not a party to the appeal and who was not before him. The powers of review or revision of the Custodian under Section 26 (1) are confined to passing such orders as he thinks fit in relation to the orders passed by his subordinate officer and which have been called up for review or revision. Therefore the orders which were before the Custodian under his revisional powers were the orders passed by the Deputy Custodian of Bombay and the Deputy Custodian of Thana holding that the property of the second petitioner was evacuee property. These orders in no way dealt with the property of the first petitioner, and therefore the powers of review and revision which the Custodian could exercise were limited to correcting the orders passed by the Deputy Custodian against the second petitioner. In fact, when he passed the order in appeal, the Custodian held that these orders were bad and set them aside. But what is urged is that he also in exercising those powers issued a notice on 3rd March 1950, against the shareholders which he was not entitled....
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....rt comes to the conclusion that certain conditions are laid down by statute as conditions precedent and those conditions have got to be satisfied in order that the officer exercising his powers should have jurisdiction at all, that failure to comply with those conditions would make the order without jurisdiction. In my opinion, under Section 7 (1) the two conditions which I have indicated are not merely procedural in character, but they are substantive conditions laid down by the Legislature as a safeguard for the citizen and those conditions must be strictly complied with. 27. Now, the manner of giving the notice and the contents of the notice have been prescribed by the rules framed under the Ordinance. Rule 5 (1) says: "After a survey of any property is made and the Custodian is satisfied that his information and the survey prima facie disclose that the property or any interest therein is evacuee property, he shall cause a notice to be served, in Form No. I on the person claiming title to such property or interest and on any other person or persons whom he considers to be interested in the property." Sub-rule (2) says : "The notice shall, as far as practicab....
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....e person against whom action is proposed to be taken that he is going to be held to be an evacuee and that all his property is going to vest in the Custodian, then it is clear that the notice must specify with sufficient clarity and particularity what are the grounds which have led the Custodian to come to the conclusion that the person against whom action is going to be taken is an evacuee. The Legislature very wisely made the Custodian a quasi-judicial officer, made the inquiry a quasi judicial proceeding, so that the rights of any citizen should not lightly taken away. If that was the object of the Legislature, then it was in furtherance of that object thatSection 7 (1) required a proper notice to be served upon the citizen, and it is difficult to believe that a notice can ever be a proper notice which does not state the grounds which led the Custodian to come to a particular conclusion and which would enable the citizen to meet the case as presented to the Custodian and as prima facie accepted by him. It is also difficult to understand how under any circumstance it would not be practicable for the Custodian to state the grounds as required by Rule 5. As I said before, Section 7....
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....tion of any right to interest in or benefit from any evacuee or abandoned property in Pakistan otherwise than by way of purchase or exchange." Mr. Seervai says that the grounds are nothing more than the reproduction of the section and, therefore, under the form the only obligation is merely to indicate the section or reproduce the section and nothing more. In my opinion, this form does not substantially alter the form to be found under the rules framed under the Ordinance. Apart from the notice being in compliance with the form, Rule 5(1), Rule 5(2) independently of the form makes it incumbent upon the notice mentioning the grounds on which the property is sought to fee declared evacuee, property, and therefore, even assuming that the form does not require the stating of grounds, to the extent that the form does not comply with Rule 5 (2) the form would be bad and it would be incumbent upon the Custodian to comply with Rule 5 (2) and state the grounds in the notice which he issues under Section 7 (1) of the Ordinance. It is clear, as I said before, that it is incumbent upon the Custodian not to state the grounds merely by reproducing the section, but to state them with suffici....
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....s list, and as it happened the address of the first petitioner was somewhere in Saurashtra and therefore he addressed the notice there. Now there are certain undisputed facts in this case to which attention might be called. A list of addresses of all the shareholders was filed by the first petitioner before the Deputy Custodian of Thana. Those were according to the first petitioner the correct addresses. It also appears that on 2nd March 1950, a day before the notice was served by the Custodian, the first petitioner was personally present at the heating of the appeal in connection with the notifications issued by the Deputy Custodian to which reference has been made. Therefore the Custodian knew that on 2nd March petitioner 1 was in Bombay, and yet, as I said before, the notice addressed to the first petitioner was sent on March 3 to Saurashtra. The first petitioner's contention is that the notice was not properly served, that he had no hearing, and the order was made ex parte, and therefore the rules of natural justice were not complied with. The Custodian has given an answer in his affidavit and his contention is that it was reasonable for him to have relied on the addresses ....
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....he Ordinance. Now a division bench of this Court in Khurshed Mody v. Bent Controller, Bombay, 48 Bom. L. R. 565 took the view that although the High Court was ordinarily very loath to issue the high prerogative writ of certiorari, if there was another suitable remedy open to the petitioner as for instance a right of appeal, it may issue a writ even though such a suitable remedy was open, if it was satisfied that the officer against whom the writ was sought had acted in a manner which was contrary to the fundamental principles of justice. I was a party to this decision and speaking for myself I should like to explain the effect of this decision as some doubt has been cast upon its correctness. When there is an alternative adequate and specific remedy, it is always a factor which the Court must take into consideration in deciding whether a writ of certiorari should or should not issue. It the Court finds that a fundamental principle of justice has been violated, that is an important factor which the Court should also take into consideration, and if it finds that a fundamental principle of justice has been violated, it should not refuse to issue a writ merely on the ground that there ....
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....Ahmed v. Municipal Board, Kairana, 1950 S.C.R. 566 and the statement of the law in the judgment of Das J. relied upon appears at p. 572, and the statement is this "There can be no question, that the existence of an adequate legal remedy is a thing to be taken into consideration in the matter of granting writs, but the powers given to this Court under Article 32 are much wider and are not confined to issuing prerogative writs only." It does not seem that this statement of the law in any way runs counter to what we held inKhurshed Mody v. Bent Controller, Bombay, (48 Bom. L. R. 565). Certainly the existence of an adequate legal remedy should be taken into consideration, but Das J. does not say that the existence of an adequate legal remedy disentitles the petitioner from obtaining a writ of certiorari from the Court. Further, the Supreme Court emphasises the fact that under Article 32 the powers of the Supreme Court are much wider. Similarly, under Article 226 of the Constitution, the powers of the High Court are much wider than they were before the Constitution came into existence. In our opinion, therefore, the mere fact that there was a right of appeal given to the peti....
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....e is wide enough to give effect to the provisions of the Ordinance even though those provisions may override or are inconsistent with any other law for the time being in force, and even if Mr. Maneksha was right that the effect of vesting the shares in the custodian may be inconsistent with or override the provisions of the Companies Act, Section 4 gives effect, to the provisions of the Ordinance notwithstanding any inconsistency there may be between the provisions of the Ordinance and the provisions of the Companies Act. But apart from that, even assuming the requisition was bad, it is difficult to understand how the second petitioner company or the first petitioner can obtain any relief at our hands by way of any writ. If the requisitions is bad, the directors can ignore it and refuse to, call a meeting as required by the requisition. If the Custodian can compel the directors to call a meeting, he will have to take appropriate measures and then the directors could question the validity of the requisition. But as the matter stands today, there is no immediate threat of any right of the first petitioner or the second petitioner which requires relief at the hands of this Court. But ....