Lachhman Dass & Ors Vs. Municipal
Committee, Jalalabad & Ors  INSC 38 (12 February 1968)
12/02/1968 SIKRI, S.M.
HIDAYATULLAH, M. (CJ) BACHAWAT, R.S.
CITATION: 1969 AIR 1126 1969 SCR (3) 645 1969
SCC (1) 653
CITATOR INFO :
RF 1970 SC 564 (97) R 1983 SC1301 (2)
Displaced Persons (Compensation and
Rehabilitation) Act, 1954, S. 20 B-If violative of Art. 31(2) of the
In 1949 certain property was treated as
evacuee property and the District Rent and Managing Officer, Jalalabad, began
to recover rent in respect of it. The respondent Municipal Committee claimed
the property as its own and filed a suit for a declaration to that effect. By
order of the trial court the matter was referred to the Custodian General who,
in exercise of his powers under section 27 of the Administration of Evacuee
Property Act 1950, held that the property under dispute had wrongly been taken
over as evacuee property and ordered it to be released in favour of the
respondent Municipal Committee. After the Committee applied for restoration of
possession of the property, the District Rent and Managing Officer sent a memo
to the respondent committee stating that the property under dispute had already
been transferred to the occupants and that its assessed price was Rs. 6,542. He
further stated that it was not expedient or practicable to restore the property
to the respondent committee and it had, therefore, been decided to transfer to
it any other immovable property in the compensation pool of the equivalent
amount in lieu thereof under section 20B of the Displaced Persons (Compensation
and Rehabilitation Act) 1954. By a writ petition, the respondent challenged the
vires of section 20-B of 1954 Act as well as the validity of the Memo from the
District Rent and Managing Officer, Jalalabad. The High Court, following its
early decision in Kirpal Singh v. Central Government;
I.L.R.  2 P. & H., 574, held that
section 20-B was unconstitutional being ultra vires Articles 14 and 19(1)(f) of
the Constitution. It held, however, that the section did not violate Art. 31(2)
of the Constitution.
On appeal to this Court,
HELD : Section 20-B of the Displaced Persons
(Compensation and Rehabilitation) Act 1954 was violative of both provisions of
Art. 31(2).. Although to provide for rehabilitation of displaced persons was a
public purpose, it did not serve any public purpose to provide in Section 20-B
that if a displaced person was in occupation of some body's property he could
not be given other property because it would not be expedient or practicable to
do so. A public, purpose may be served if it had been provided that a displaced
person may not be ousted because his business would be ruined or that he would
be completely thrown on the street, but to provide in the section that if the
Central Government does not think it expedient or practicable for its own
convenience or for the convenience of a lessee or licensee who is not a
displaced person it may not restore property serves no public purchase. Under
the section the Central Government was entitled not to restore property to
serve a purpose other than a public purpose and consequently the section was
ultra vires Art. 31(2). [650 H] 646 The section was also violative of Art.
31(2) as it did not fix any compensation or Jay down any principle for
Amar Singh v. Custodian, Evacuee Property,
Punjab,  S.C.R. 801, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 1407 and 1569 of 1968.
Appeals from the order dated May 3, 1967 of
the Punjab and Haryana High Court in Letters Patent Appeal No. 37 of 1967.
S. K. Mehta, K. L. Mehta, for the appellants
(in C.A. No.
1407 of 1968) and respondents Nos. 2 to 7
(in, C.A. No. 1569 of 1968).
Bishan Narain, A. Sreedharan Nambiar and S.
P. Nayar, for the appellants (in C.A. No. 1569 of 1968) and respondents Nos. 2,
4 and 5 (in C.A. No, 1407 of 1968).
U. P. Singh, for respondent No. 1 (in C.A.
No. 1407 of 1968).
The Judgment of the Court was delivered by
Sikri, J. The Municipal Committee, Jalalabad, respondent before us in these
appeals filed an application under Arts.
226 and 227 of the Constitution praying that
S. 20 B of the Displaced Persons (Compensation and Rehabilitation) Act,
1954-hereinafter referred to as the Compensation Act-be declared ultra vires
the Constitution and that the memorandum dated March 14, 1963, communicated by
the District Rent and Managing Officer, Jalalabad, be quashed.
The learned Single Judge, following an
earlier judgment of the Punjab and Haryana High Court in Kirpal Singh v. The
Central Government(1), held that s. 20B of the Compensation Act was ultra
vires, and quashed the impugned order dated March 14, 1963, and directed the
restoration of the property in dispute to the Municipal Committee. An appeal
was taken to, the Letters Patent Bench but this was dismissed in limine. Two
appeals have been filed against this judgment, one by the Union of India and
its officers who are interested only in the question of the vires of the
section, and the other by Lachhmandas and others to whom the shops in dispute
have been transferred.
The relevant facts may be stated shortly. The
Nawab of Mamdot became an evacuee in 1947 on the partition of the country and
his property was taken over by the Custodian as evacuee property. In 1949, the
District Rent and Managing Officer treated five shops, situated in Chowk Kalan,
Jalalabad, as belonging to the Nawab of Mamdot and began to recover the rent of
the shops from the tenants. The Municipal Committee protested and lengthy
correspondence ensued between the Municipal Committee and (1) I.L.R.  2
P. & H. 574.
647 the Custodian. Eventually the Municipal
Committee filed a Civil Suit in 1958 against the Union of India for a
declaration that the said shops were their own property and not evacuee
property. Ultimately, the Trial Court, by order dated January 8, 1962, made a
reference to the Custodian General for determining the question whether the
shops in dispute were evacuee property or-not. The Deputy Custodian General,
exercising his powers under s. 27 of the Administration of Evacuee Property
Act, 1950 (hereinafter referred to as the Evacuee Act) held that the property
in dispute had been wrongly taken over as evacuee property and ordered that the
five shops be released in favour of the Municipal Committee, Jalalabad. On
this, the Municipal Committee applied to the Regional Settlement Commissioner,
under r. 37 of the Administration of Evacuee Property (Central) Rules, 1950 for
the restoration and possession of the five shops. On March 14, 1963, the
District Rent and Managing Officer, Jalalabad, sent a memorandum to the
Municipal Committee stating that the property in dispute had already been
transferred to the occupants and disposed of' under the Compensation Act and
that its assessed price was Rs. 6,542. In the memorandum it was further stated
"It is not, therefore, expedient or
practicable to restore the above property to you and it-has, therefore, been
decided to transfer you any other immovable property in the compensation pool
of the equal amount in lieu thereof under section 20B of the D.Ps. (C&R)
Act, 1954." The memorandum also listed some properties which were available
for transfer to the Municipal Committee. This is the memorandum that has been quashed
by the High Court.
The above proposal was not acceptable 'Lo the
Municipal Committee. It was pointed out by the Municipal Committee in reply
that it was incorrect that all the five shops had been transferred and that the
assessment price was Rs. 6,452.
According to the Municipal Committee only one
shop out of these, in possession of Dogar Mal Ram Chand, had been auctioned for
Rs. 10,100 although the sale had not matured.
It appears that one shop was released in
favour of the Municipal Committee but the Department refused to release the
other shops. After unsuccessfully approaching the Settlement Officer, with
delegate powers of the Settlement Commissioner, the writ application under Art.
226 was filed in the High Court.
In Kirpal Singh v. The Central Government(-)
the High Court had held that s. 20B of the Compensation Act was unconstitutional
being ultra vires Arts. 14 and 19 (1) (f) of the Constitution. The High Court was,
however, of the opinion that this (1) I.L.R.  2 P. & H. 574.
648 section did not violate Art. 31(2) of the
Constitution. As we 'have come to the conclusion that S. 20B violates Art.
31(2) of the Constitution, we need not consider
whether the reasoning of the High Court is correct regarding the section being ultra
vires Arts. 14 or 19(1) (f). Section 20B is in the following terms "20B. (1)
Where any person is entitled to the restoration of any property by virtue of an
order made by the Custodian-General under section 27 of the Administration of
Evacuee Property Act, 1950, or by the competent officer or the appellate officer
under the Evacuee Interest Separation Act, 1951, and the Central Government is of
opinion that it is not expedient or practicable to restore the whole or any part
of such property to that person by reason of the property or part thereof being
in occupation of a displaced person or otherwise, then, notwithstanding anything
contained in the said Acts or this Act, it shall be lawful for the Central Government
:(a) to transfer to that person in lieu of the property to be restored or any part
thereof, any immovable property in the compensation pool or any part thereof, being
in the opinion of the Central Government as nearly as may be of the same value as
the property to be restored or, as the case may be, any part thereof, or (b) to
pay to that person such amount in cash from the compensation pool in lieu of the
property to be restored or part thereof, as the Central Government having regard
to the value of the property to be restored or part thereof, may in the circumstances
(2) Where in pursuance of sub-section (1) any
person has been granted any immovable property from the compensation pool or has
been paid any amount in cash from the compensation pool, his right, title and interest
in the property to be restored shall be deemed to have been extinguished.
Before we deal with the constitutionality of this
section, we may briefly refer to its background. This is set out in detail by this
Court in Amar Singh v. Custodian, Evacuee Property, Punjab(1). In brief, a number
of steps were taken by Government to rehabilitate the displaced persons coming from
West Pakistan. The first legislative measure enacted to achieve this purpose was
the East Punjab Evacuees' (Administration of (1)  S.C.R. 801.
649 Property) Ordinance, 1947. Various other acts
were passed which are set out at p. 809 of the above judgment. It is enough for
the purposes of this case to consider the effect of the provisions of the Compensation
Act and the Evacuee Act. Under s. 7 of the Evacuee Act property was notified as
being evacuee property, and under s. 8 the property declared to be evacuee property
vested in the Custodian. Under s. 9, the Custodian was empowered to take possession
of the property vested in him, and the Custodian was entitled under s. 10 to administer,
preserve and manage any evacuee property. In exercise of the powers he granted leases
and made allotments out of the evacuee property, in favour of displaced persons.
By 1954 it was decided that displaced persons
should be paid compensation in respect of the property left by them in the territories
now forming part of West Pakistan. With that end in view the Compensation Act was
passed. Section 12 enabled the Central Government to acquire property which had
been declared evacuee property and vested in the Custodian.
After acquisition the title of the evacuee was
extinguished and the evacuee property vested absolutely in the Central Government
free from all encumbrances. All the property acquired under this section formed
part of the compensation pool. Cash balances lying with the Custodian and certain
other contributions and assets were also thrown in the compensation pool. Elaborate
rules were framed under the Compensation Act for the purpose of paying compensation
to displaced persons out of the compensation pool. One of the ways of paying compensation
was transfer of property.
It is not disputed that Lachhman Dass and others
were granted salads under the Compensation Act and thus purported to acquire ownership
rights in the shops.
The objects and reasons for enacting s. 20B were
"Instances have come to notice where some
properties were wrongly declared to be evacuee property and they were also acquired.
In such cases, the Custodian-General is empowered under section 27 of the Administration
of Evacuee Property Act, 1950 to restore such property to the non-evacuee owner.
Similarly, a competent officer has also power under the Evacuee Interest Separation
Act, 1951, to declare a share in a property to be non evacuee after the whole of
it has been declared to be evacuee property and has been acquired. It is not sometimes
possible to restore the original property to the nonevacuee owner because of its
transfer to a displaced person. To overcome this 650 difficulty, it is proposed
to insert a new section 20-B on the lines of section 20-A." We may first analyse
the provisions of s. 20-B. It proceeds on t he basis that the property to be restored
had in fact not properly vested in the displaced persons or the Central Government.
Ordinarily, the rightful owner would be entitled to have the property restored to
him. But the section enables the Central Government to deprive him of that property
if it is of the opinion that it is not expedient or practicable to restore the whole
or part of the property. The section mentions one reason why it may not be expedient
or practicable, and that is that the property is in the occupation of a displaced
person. Even if this is assumed to be an adequate reason, it makes it almost non
controlling by saying that any other reason will be good enough. This is the only
meaning we can give to the word "otherwise". In other words, this means
that if the Central Government likes the property or its lessee or licensee or transferee
and it finds it irksome or does not want to annoy that person it could deprive the
rightful owner of his property. The Central Government is not concerned with justness
but whether it would be politic to restore the property. If the Central Government
has decided to deprive the rightful owner of the property it may transfer to that
person any property being, again in the opinion of the Central Government, as nearly
as may be, of the same value as the property to be restored, but the section does
not say value at what point of time; whether at the time the property was taken
possession of by the Custodian, the Central Government or the displaced person,
or at the time the title of the rightful owner is extinguished. The section further
gives an alternative to the Central Government to offer cash from the compensation
pool, having regard to the value of the property. Here again no indication is given
whether the cash has to be equivalent to the full value of the property and no indication
as to, the point of time at which value is to, be ascertained. Under sub-s. (2)
after the rightful owner has been granted any immovable property from the compensation
pool or has been paid any cash then his title is extinguished.
It seems to us that the High Court was not right
in holding that the section did not violate Art. 31(2) of the Constitution Art.
31(2) provides for two things; (1) the acquisition or requisition should be for
a public purpose;
and (2) the law should provide for compensation
and either it should fix the amount of compensation or specify the principles on
which and the manner in which the compensation has to be determined or given.
In our view, S. 20B violates both these provisions
of the article. There is no doubt that to provide for rehabilitation of displaced
persons was a public purpose but it does not serve any 651 public purpose to provide
that if a displaced person is in occupation of somebody's property he should not
be given other property because it will not be expedient or practicable to do so.
A public purpose may be served if it had been provided that a displaced person may
not be ousted because his business would be ruined or that he would be completely
thrown on the street, but to provide in the section that if the Central Government
does not think it expedient or practicable for its own convenience or for the convenience
of a lessee or licensee who is not a displaced person it may not restore property
serves no public purpose.
In our view, under the section the Central Government
is entitled not to restore property to serve a purpose other than a public purpose
and consequently the section is ultra vires Art. 3 1 (2).
Further, in our opinion, the section does not
fix any compensation or lay down any principles for compensation. Subs. (1) (a)
of s. 20B may perhaps be taken as laying down some principle, namely, that the value
should be the same but it does not prescribe the point of time at which the value
is to be ascertained. In sub-cl.(b) nothing is said about the cash being equivalent
to the value of the property which is sought not to be restored. The Central Government
might, having regard to the value of the property, decide that cash to the extent
of 50 per cent of its value should be paid. In doing this it would be having regard
to the value of the property but it would be following another rule, namely, that
the cash should be half of the value of the property which is laid down in the section.
We are quite aware that the Central Government
was faced with the problem mentioned in the "objects and reasons" set
out above, and this problem had to be tackled, but the problem should and can be
tackled in accordance with law and the Constitution.
It was sought to be argued before us that Art.
3 1 (2A) applied in this case, but it seems to us that insofar as the property was
still part of the compensation pool the effect of the extinguishment of the title
of the rightful owner would be to vest the property in the Central Government. It
may be that insofar as the title vested in the displaced person the case would come
within Art. 31 (2A), but then the section is not severable and it has to be declared
void as a whole. We need not consider the point that even if the section is severable,
it would be void under Art. 19 ( 1 ) (f). The points we have mentioned above would
also be relevant in considering the reasonableness of the restrictions.
We may mention that the learned counsel on behalf
of Lachhman Dass and others, the displaced persons to whom the shops had been purported
to have been transferred under the sanads, tried to attack the validity of the order
of the Custodian652 General under s. 27 of the Evacuee Act on the ground that they
were not heard. This point was not taken in the High Court and we cannot allow it
to be raised before us at this stage.
In the result the appeals fail and are dismissed
one hearing fee.