Litigation Supreme Court of India

Enemy properties – A time to divest. Again.

The gates of the Butler Palace in Lucknow, which is one of several expensive properties that are once again at the centre of controversy over the enemy properties law. Vivekananda N. follows the conflicts between the central government and the courts through the litigations of Raja Mohammed Amir Mohammed Khan.
The gates of the Butler Palace in Lucknow, which is one of several expensive properties that are once again at the centre of controversy over the enemy properties law.

Mahmudabad is a city in the Sitapur district of Uttar Pradesh and lies in the erstwhile state of Oudh. Its last ruler, Raja Mohammad Amir Ahmed Khan went into self-imposed exile in 1947 to Iraq and spent nearly ten years living in Karbala and Baghdad. He became a Pakistani citizen in 1957, but Pandit Jawaharlal Nehru refused to cancel his passport and Indian citizenship out of regard for him and his role in the freedom struggle. It is said that he thereafter declined Nehru’s offer to retain Indian citizenship. The late Raja passed away in London in October 1973.

More than thirty-six years later, on 30 August 2010, the Home Minister, Mr. P. Chidamabaram, announced to the Lok Sabha amid some pandemonium that the Government had decided to withdraw the Enemy Property (Amendment and Validation) Bill, 2010. The Leader of the Opposition urged that the Government was in the habit of attempting to sidestep the process of sending Bills to Standing Committees for scrutiny, and suspected that the Government may re-promulgate a controversial Ordinance once Parliament was no longer in session. The Home Minister reiterated that the Bill was being withdrawn purely to provide Members more time to study the provisions of the Bill, on their own request, due to some concerns expressed in discussions with Members, and that the Bill would be re-introduced in the winter session of the Parliament. The direct and inevitable effect of the Bill on properties worth crores of rupees across the country, including that of the late Raja, is significant and there is opposition to this Bill from several quarters, particularly in northern India.

In December 1962, during the Emergency promulgated by President, Sarvepalli Radhakrishnan on account of the war with China, the Government enacted the Defence of India Act, 1962 to replace the Defence of India Ordinance, 1962. The Act was directed at providing measures necessary to ensure public safety during the time of war. Apart from amending legislations such as the Official Secrets Act to provide for severe offences under such legislations and creating special tribunals to try such offences, it also conferred powers to requisition properties for defence purposes under the Defence of India Act, apart from conferring wide rule making powers on the central government. In exercise of such power, the Government issued the Enemy Property (Custody and Registration) Order, 1962.

In 1965, when India and Pakistan were in the midst of their second major war, the Government issued a 1965 Order to replace the 1962 Order. This order was replaced by the Enemy Property Ordinance, 1968 and ultimately the Enemy Property Act of 1968.

The avowed purpose of the legislation was to take over and manage properties belonging to an enemy or an enemy firm. An enemy or enemy firm was defined under the Defence of India Act as, amongst others, a person or country committing external aggression against India. The Defence of India Act lapsesd six months after the Emergency ended, and has since been re-enacted in 1971.

The late Raja, having fled to Pakistan in 1957, had to immediately deal with his properties being vested in the authority under the Enemy Property Act. This was the Custodian of Enemy Property in India. Under the 1968 Act, the Custodian was empowered to carry on business in the name of the Raja, take action for recovering money on his behalf, make contracts and execute documents on his behalf or lease, mortgage or even sell the properties that belonged to him. Section 18 of the Act however, permitted the Union Government to divest the Custodian of such property and return the property to the original owner or any other person.

Once the late Raja had passed away, his son and sole heir, Raja Mohammed Amir Mohammed Khan, who had continued to remain in India since his birth, made representations to the Government to release the properties of his late father from the Custodian. Having failed to achieve any success, in 1981, he approached a civil court in Lucknow seeking restoration of the properties. The civil court ruled in his favour, but due to the continued inactivity of the government on the decree, Mohammed Amir Mohammed Khan approached the Bombay High Court.

The Bombay High Court took the same view as the Calcutta High Court did in two other cases – that Section 18 of the 1968 Act only implied that the properties vested in the Custodian, and that the owners and their heirs had not been divested of their right, title and interest in the property. The Union Government conceded before the Bombay High Court that Mohammed Amir Mohammed Khan was an Indian citizen and the sole heir to the properties but appealed to the Supreme Court on the proper construction of the 1968 Act.

24 years after legal proceedings had commenced, the Supreme Court [(2005) 8 SCC 696] directed restoration of the properties to Mohammed Amir Mohammed Khan. The view taken by the Bombay and Calcutta High Courts on the nature of vesting of the properties in the Custodian was accepted. The civil court decree had attained finality. The Court also found that Mohammed Amir Mohammed Khan, could not be termed an ‘enemy’ for the purposes of the 1968 Act, or otherwise, having been an Indian citizen all his life. Importantly, the Court took the view that it possessed the power to direct divesting of the property held by the Custodian although the 1968 Act conferred only the central government with such a power.

Incidentally, the Court also noted that the central government had refused to place on record before the High Court, a note put up before the Cabinet for a decision on release of the properties, despite an Order to such effect, evidencing mala fide intentions to retain the properties. Perhaps the fact that the Deputy Commissioner, the Superintendent of Police and several other district officers resided in such properties was a relevant factor.

At last count, the properties of the late Raja were worth over thousands of crores and included the Butler Palace and the Lawrie Building in Lucknow and the Metropole Hotel in Nainital. Figures made available in the Rajya Sabha however pegged the value of the properties vested in the Custodian of Enemy Property at a measly 75 odd crores as of August 1996.

In June 1994, there were approximately 600 odd cases involving the Custodian of Enemy Property pending in various courts in India with a vast majority of them in North India. After the Supreme Court decision, the number of such cases has multiplied many times over, with heirs to several lucrative properties rushing to the courts to reclaim their titles.

However, Mohammed Amir Mohammed Khan’s joy was short lived. In July 2010, the President promulgated an Ordinance, which formed the basis of the Bill introduced in Parliament, and sought to restore the position that existed prior to the Supreme Court judgment. The Ordinance reversed any divesting of enemy property by any means, and sought to take away the power of any court to order any divesting of enemy property from the Custodian.

Interestingly, the Ordinance and the Bill also seek to deny to any person who may have received properties after a divestment, any income received by the Custodian in respect of such a property. The Supreme Court had directed that mesne profits post a status quo order passed by it were to be handed over to Mohammed Amir Mohammed Khan. He then fought an unsuccessful litigation in the Supreme Court for his mesne profits for the period prior to the status quo order and was directed to continue civil proceedings he had already initiated for this purpose.

Opposition to the Ordinance was swift. Mulayam Singh Yadav and Lalu Prasad Yadav vehemently opposed the Ordinance as being unfavourable to poor Muslims. In their opposition, they were perhaps, motivated not only by consternation on the effect that the Bill would have on properties such as those that belonged to the Raja but were perhaps also referring to another amendment that the Ordinance had brought which conferred the Custodian with the power to evict any unauthorised or illegal occupants or trespassers on such properties.

The Raja had lost his properties to the Custodian again. He approached the Delhi High Court which immediately directed the government to not create any third party rights in properties already seized or, taken over and revested in the Custodian on the strength of the new Ordinance.

The 2010 Bill does not change the basis of the Supreme Court decision. It seeks to reverse it legislatively and ward off litigation on enemy property. It is a different matter that the Supreme Court has repeatedly cautioned that legislative reversals of court decisions or interference in judicial functioning was illegal, be it in the Representation of People’s Act (in 2003), the Bombay Provincial Municipal Corporation Act (in 1970), the Cauvery water dispute (in 1991), the Orissa amendments to the Arbitration Act (1991) or, the Karnataka State Civil Services Act (in 1973). Courts have also taken the view that Parliament ought not to sit in appeal over a decision, especially if motivated by political ideology or economic theory. The Statement of Objects and Reasons appended to the Bill, besides merely stating the effect of the Bill, is reasonably vague on the purpose behind the revesting of already divested properties in the Custodian.

The Ordinance has now lapsed, but we may not have seen the last of the ligation on the proposed amendments yet.

(N. Vivekananda is a Delhi-based advocate.)