Case Note & Summary
By way of a petition under Article 32 of the Constitution, the petitioner challenged the constitutionality of provisions of the Administration of Evacuee Property Act, 1950, particularly Section 2(d) and Section 40(4), and sought relief against an order passed by the Custodian of Evacuee Properties refusing to confirm a sale of land in his favour. The dispute concerned 195.51 acres of land in the former Bhopal State which the petitioner purchased from one Babu Rehmatullah on June 23, 1950, for Rs. 3,500. Rehmatullah was declared an intending evacuee and later left for Pakistan on June 20, 1951. On June 12, 1951, the Assistant Custodian issued a show cause notice to the petitioner, and after hearing him, declared the land evacuee property on August 8, 1951. The petitioner's appeal and revision under the Act were unsuccessful, and a writ petition before the Judicial Commissioner, Bhopal was dismissed in limine on July 14, 1954. He then approached the Supreme Court under Article 32. The petitioner raised two main contentions. First, that Sections 2(d) and 40(4) of the Act were unconstitutional because they enabled the State to take away property without paying compensation, contrary to Article 31(2). Second, that the Custodian's order rejecting confirmation of the sale under Section 40(4)(a) on the ground that the evacuee did not act in good faith was arbitrary and discriminatory. The Court rejected the first contention by relying on Article 31(5)(b)(iii) of the Constitution, which exempts laws made in pursuance of agreements with respect to property declared by law to be evacuee property from the operation of Article 31(2). The Court held that the phrase 'property declared by law to be evacuee property' includes property declared by an authority under criteria laid down by law; the protection is not limited to a law that itself specifies particular properties. The Court also repelled the argument based on Article 31(1), holding that deprivation of property was by authority of the validly enacted law. On the second contention, the Court examined Section 40(4)(a) of the Act, which empowers the Custodian to reject an application for confirmation if the transaction was not entered into in good faith or for valuable consideration. The petitioner argued that the term 'good faith' was vague and conferred arbitrary power. The Court held that 'good faith' has acquired a definite meaning in courts of law, and the power conferred by Section 40(4) is in the nature of a judicial power; therefore, absence of a standard does not render the provision unconstitutional. The Court noted that the petitioner's reliance on the absence of good faith of the transferee was not pressed in view of the earlier decision in Rabia Bai v. The Custodian-General of Evacuee Property. On the discrimination argument, the Court observed that the Custodian's order was a judicial order and that merely because another transaction was treated differently did not establish discrimination. Accordingly, the Supreme Court held that the provisions of Sections 2(d) and 40(4) of the Administration of Evacuee Property Act, 1950 were not unconstitutional and the Custodian's order rejecting confirmation was valid. The petition was dismissed without costs.
Headnote
A) Constitutional Law - Evacuee Property - Article 31(5)(b)(iii) Protection - Constitution of India, Article 31(5)(b)(iii) - The petitioner challenged Sections 2(d) and 40(4) of the Administration of Evacuee Property Act, 1950 as violating Article 31(2). The Court held that Article 31(5)(b)(iii) exempts laws made in pursuance of agreements with respect to property declared by law to be evacuee property from the compensation requirement. Held that the protection extends to a law empowering an authority to declare property evacuee and laying down criteria, not limited to a law which itself declares specific property. (Paras 3-4) B) Constitutional Law - Deprivation of Property - Article 31(1) Authority of Law - Constitution of India, Article 31(1) - The petitioner argued that the property was not evacuee property and that Article 31(1) barred taking it away. The Court held that the declaration was made pursuant to a valid law, so deprivation was by authority of law. Since the law was not unconstitutional, no violation. (Para 5) C) Administrative Law - Judicial Power - Good Faith Standard in Section 40(4)(a) - Administration of Evacuee Property Act, 1950, Section 40(4)(a) - The petitioner contended that the term 'good faith' was vague and conferred arbitrary power on the Custodian. The Court held that 'good faith' has a definite legal meaning and the power under Section 40(4) is judicial in nature; absence of a standard does not render the provision unconstitutional. (Paras 6-7) D) Constitutional Law - Equality - Discrimination in Confirmation Decisions - Constitution of India, Article 32 - The petitioner alleged discrimination because another transaction by the same evacuee was confirmed while his was rejected. The Court held that the Custodian's order is a judicial order and a possible error in one case does not establish discrimination. (Paras 8-9)
Issue of Consideration
Whether Sections 2(d) and 40(4) of the Administration of Evacuee Property Act, 1950 are unconstitutional as violating Article 31(2) of the Constitution; whether the protection under Article 31(5)(b)(iii) extends to a law empowering an authority to declare property as evacuee property; whether Section 40(4)(a) confers arbitrary power on the Custodian due to absence of standard for determining good faith; whether the petitioner was discriminated against by the Custodian's confirmation decisions.
Final Decision
Petition dismissed without costs. The provisions of Sections 2(d) and 40(4) of the Administration of Evacuee Property Act, 1950 were held not unconstitutional. The order of the Custodian refusing confirmation under Section 40(4)(a) was upheld.
Law Points
- Article 31(5)(b)(iii) of the Constitution protects laws empowering an authority to declare evacuee property and laying down criteria for such declaration
- Section 40(4)(a) of the Administration of Evacuee Property Act
- 1950 confers a judicial power on the Custodian
- the phrase 'good faith' has a definite legal meaning and its use does not render the provision arbitrary
- a judicial order of the Custodian cannot be challenged as discriminatory merely because another case was decided differently.
