RABIA BAI versus THE CUSTODIAN-GENERAL OF EVACUEE PROPERTY

Gopal Vinayak Godse v. Stale of lvf aharashtra

Subba Rao].

The petitioner made an impassioned appeal to us that if such construction be accepted, he would be at the mercy of the appropriate Government and that the said Government, out of spite, might not remit the balance of his sentence, with the result that he would be deprived of the fruits of remissions earned by him for sustained good conduct, useful service and evPn donation of blood. The Constitution as well as the Code of Criminal Procedure confer the power to remit sentence on the executive Government and it is in its exclusive province. \Ve cannot assume that the appropriate Government will not exercise its jurisdic-tion in reasonable manner.

For the foregoing reasons we hold that the peti-tioner is under legal detention and the petition for habeas corpus is not maintainable. The petition is dismissed.

Petition dismissed.

IQ6I -fj ·' January zz.

RABIABAI v. THE CUSTODIAN-GENERAL OF EVACUEE PROPERTY.

(P. B. GAJENDRAGADKAR, A. K. SARKAR,

K. SUBB:. RAO, K. N. W ANCHOO and

J. R. MUDHOLKAR, JJ.)

Evacuee Properly-Sale before enactment of evacuee laws-Confirmation of sale-Vendor inteniling to defeat apprehended evacuee .laws-Good faith, if lacking-Administration of Evacuee Property Act, r950 (XXXI of r950). s. 40(4)(a).

M who had gone to Pakistan in 1947, sold his property in the

State of Madras to the appellant on August II, 1949. At that time there was no legislation with respect to evacuee property in Madras. On August 23, 1949, the Administration of Evac-Property (Chief Commissioners Provinces) Ordinance, 1949 (XII of 1949), was extended to Madras. The appellant made an appli-cation for the confirmation of the sale. Subsequently, M was declared an evacuee and the property as evacuee property. It was found that M had entered into the transaction with the object of evading the evacuee Jaw which it was apprehended, would be extended to Madras. Consequently, confirmation of the ·sale was refused under s. 40(4)(a) of the Administration of Evacuee

Property Act, 1950, on the ground that the transaction had not been entered into in good faith. The appellant contended that there was no lack of good faith on the part of M as he could not be said to have acted dishonestly when at the time of the sale no evacuee 1 aw ad een app 11e [. ]to M ras an th at an tn · t ent1on · to ,, avoid future law could not be said to be dishonest. 01

Rabia Bai d. v. ,uslo ian-P '"""""'p 1 vacuee [0 ]er:

Held, that the vendor had not entered into the transaction

in "good faith'" and the confirmation of the sale was rightly refused under s. 40(4)(a) of the Act. Having regard to the aim and object of the emergency legislation deliberate intention to defeat the apprehended evacuee law motivating sale amounted to want of "good faith'". If the vendor sold his property not for any necessity or any other legitimate purpose but solely with the object of converting it into cash and removing it to Pakistan, he intended to defeat the provisions of the evacuee law which he knew was to be extended to Madras soon and he acted dis-honestly within the meaning of s. 40(4)(a}.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 22 of 1956.

Appeal by special leave from the judgment and

order dated July 4, 1954, of the Custodian-General, Evacuee Property, in Revenue Case No. 427/R/ Judl. /53.

A. V. Viswaru.itha BaBtri and R. Ganapathy Iyer, for the appellant.

H. N. Sanyal, Add.iticmal Solicitor-General of India,

N. 8.Bindra and D. Gupta, for the respondent.

1961. January 12. The Judgment of the Court was

delivered by

GA.JENDRAGADKAR, J.-This appeal by special leave Gaj1ndragadkar.

is directed against the orde_r passed by the respon-dent, the Custodian-General of Evacuee Property, New Delhi, in revision petition confirming the orders of the subordinate authorities whereby the application made by the appellant for confirmation ~f the sale transaction in question has been rejected under s. 40 (4) (a) of the Administration of Evacuee Property Aot, XXXI of 1950. The appellant, Rahia Bai, who is citizen of India h.aving her residence at Grange, Y ercaud, in the Salem District, came to know in 1949 that premises No. 20, Godown Street, G.T., Madras, was for sale. Since the appellant desired to acquire some immoveable property ijhe arranged for

1961 the purchase of the said premises through her husband. Rabia Bai The said premises belonged to one Mohamad Gani v. Jan Mohamad who had left for Pakistan in 1947 and Custodian-General had settled there. The said Mohamad Gani Jan 01 Evacuee boperty Mohamad had executed power of attorney in favour . d-dk 0of his nephew, Ahmed Abdul Gani. The said Gctni •Jen raga ' J. came to l\fadras in April, 1949, and arranged for the sale, and as result of negotiations between him and the appellant's husband the latter entered into written agreement with the former on April 29, 1949, to purchase the said property for Rs. 2,40,000/-. substantial part of the consideration to the extent of Rs. 1,50,000/- was paid immediately in the form of cash and bank drafts. Thereafter the sale deed "·as duly engrossed and sent to Karachi for execution by the vendor. After it was received back duly executed it was presented at the Collector's Office, Madras, and was duly stamped on June 27, 1949. Income-tax clearance certificate had, however, to be obtained before the said document could be registered, and soon after the said cPrtificate was obtained the document was presented for registration and was duly registered on August 11, 1949. The balance of the consideration of R.s. 30,000/- was pa.id before thf\ registering officer to Mr. M. H. Ga.nni who also held power of attorney from the vendor. That is how the appellant obtained title to the property in suit. As we will point out the appellant applied for confirmation of this sale deed and her application has been rejected. Before we refer to the relevant facts in connection with the said proceedings it is material to set out very briefly the history of the application of the evacuee laws to the State of Madras.

Within a. fortnight after the registration of the sale deed in favour of the appellant Ordinance No. XII of 1949 which had been promulgated on June 13, 1949, was extended to Madras on August 23, 1949. Section 25(1) of the Ordinance imposed restrictions on transfers by evacuees. In substance this sub-section provided that transfers ma.de by or on behalf of evacuees of any right or interest in their property after such date as may be specified in that behalf with reference to any

Province by the Central Government by notification r96r in the official gazette shall not be effective unless they Rabia Bai are confirmerl by the Custodian. Section 25(2) pro-v. vided that an application for confirmation of such custodian-General transfer may be ma.de by the transferor or the trans- of Evacuee Property feree or any person claiming under, or h1wfully . --authorised bv, either of them to the Custodian within Ga;endragadkar f. two mont.hs'from the date of registration of the deed of transfor or within two months from the coum1ence-ment of the. Ordinance whichever is later. The proviso to the said sub-section empowered the Custodian to admit an application even if it was made after the period of limitation prescribed therefor if he was satisfied that there were sufficient reasons for doing so, and it imposed on the Custodian an ol>ligatiou to record such reasons. Sub-section (3) required the Custodian to hold summary enquiry into the appli-cation in the prescribed manner, and authorised him to reject the application for confirmation if he was of opinion that (a) the transaction had not been entered into in good faith or for valuable consideration, or (b) the transaetion was prohibited under any law for the time being in force, or (c) the tramaction ought not to be confirmed for any other reason. Sub-s. (4) provides that if the application is not rejected under sub-s. (3) the Custodian may confirm the transfer either unconditionally or subject to such terms and conditions as he thinks fit to impose.

Ordinance No. XII of 1949 was, however, repealed by Ordinance No. XXVll of 1949 which came into force on October 18, 1949. Section 38 of this latter Ordinance corresponds to s. 25 of the earlier Ordinance except in one material particular. It pro-vides that no transfer of any right or interest in the property made in any manner whatsoever after the 14th day of August, 1947, by or on behalf of an evacuee as therein specified shall be effective unless it is con-firmed by the Custodian. In other words, whereas s. 25 of the earlier Ordinance left it to the Central Government to specify the relevant date in reference to any Province by notification in the official gazette, s. 38( 1) has prescribed the date for 11-ll the Provinces

where the Ordinance applied. The rest of the relevant provisions of s. 38 are the same as those of s. 25 of the earlier Ordinance.

Rabia B•i

On April 17, 1950, this Ordinance was in turn

Custodian-Ge•,.•/ On April 17, 1950, this Ordinance was in turn o/EvacueeProp .. tyrepealed by Act XXXI of 1950 bys. 58. Section 40(1) . --and (4) are similar to thti relevant provisions of ss. 25 Ga1e•dragadhar J. and 38 of the earlier Ordinances. One of the changes made is in regard to the relevant dates prescribed by s. 40(1). Under s. 40(1) ·the transfers which are affected by its provisions are those which are macle after the 14th day of August, 1947, but before the 7th day of May, 1954; and in respect of them the said section provides, inter alia, that they shall not confer any rights on the parties thereto, if at any time after the transfer the transferor becomes an evacuee within the meaning of s. 2 or the property of the transferor is declared or notified to be evacuee property within the meaning of this Act unless the transfer is confirm-ed -by the Custodian in accordance with the provisions of this Act. Section 40(4) deals with an application made under sub-s. (1) for the confirmation of the transfer. This sub-section and its three clauses (a), (b) and (c) correspond toss. 25(3) (a), (b) and (c) and 38(4)(a), (b) and (c) of the two earlier Ordinances. Thus it is clear that the relevant provisions, which conferred power on the Custodian to hold an enquiry on the application 1nade for the confirmation of the transfer and to reject confirmation in certain cases, continued to be the same. The position, therefore, is that Ordin-ance No. XII of 1949 wh;ch was extended to Madras on Augu8t 23, 1949, was in operation only until October 18, 1949. Thereafter Ordinance No. XXVII of 1949 took its place, and in turn this Ordinance was repealed by Act XXXI of 1950 on April 17, 1950. The application made by the appellant for confirmation of her purchase has been dealt with under the relevant provisions of the Act, and we would therefore refer to the said provisions hereafter.

On December 19, 1949, the appellant applied for con-

firmation of the sale tran~action in her favour. This application was resisted by the ten.ants who urged several grounds in support of their plea that the

transfer should not be confirmed. It appears that on r96r January 11, 1951, the Assistant Custodian of Evacuee Rabia Bai Property, Madras City, had declared the property of v. the vendor to be evacuee property since he was of the Custodian-Gentral opinion that the vendor's case fell within the fourofEuacueeProperly corners of the definition of "an evacuee " under . d-"[1]s. 2(d)(ii) of the Act. The declaration that the vendor's '" ragadkar f. property was evacuee property was made under s. 7(1) of the Act .. The Assistant Uustodian considered the appellant's application for confirmation of the transfer in the light of the declaration already made by him that the vendor was an evacuee and that his property was evacuee property. He referred to the relevant features of the transaction and came to the conclusion that he would not be justified in confirming it. It appears that in reaching this conclusion he relied on the provisions of s. 40(4)(c) oft.he Act. In his opinion the feverish hurry disclosed by the conduct of the vendor attracted the provisions of s. 40(4)(0). The order refusing to confirm the transaction was passed on July 31, 1951.The appellant challenged the correctness of this con-clusion by preferring an appeal before the Custodian. The Custodian found in favour of the appellant that the sale transaction in question was supported by valuable consideration; even so he proceeded to examine the question as to whether it could be said to have been entered into in good faith. In dealing with this question the appellate authority considered the fact that the vendor had left for Pakistan in June, 194 7, evidently on account of civil disturbances or in fear of such disturbances and that it was obvious that he was permanently settled in Pakistan. According to the appellate authority the vendor was desirous of disposing of his properties in India in order to convert them into cash and take them away to Pakistan. In this connect10n reliance was placed on letter written by the vendor to Mohideen on July 4, 1949. In this letter the vendor had stated that " if the matter is delayed there would be many sort of new difficulties as you know that the Government are passing new rules every day". He took the view that this Jetter

clearly disclosed that the vendor's intention was to

Rabia Bai dispose of his properties as quickly as possible so as to v. evade the restrictions of the evacuee laws which he custodian-General apprehended would be extended to Madras any day. >fEvacueePropertyOn this finding the appella1e authority came to the conclusion that the transaction had U('('tt <'ntered into Gajendragadkar J. otherwise than in good faith, and so it could not be confirmed under s. 40(4)(a). The appellate judgment shows that according to the appellate authority the request for ~onfirm:.tion could be rejected also UJH.ler s. 40(4)(c) of the Act. This order was pranounced on February 4, 1953.

The appellant then moved the respondent, the Custodian-General in his revisional jurisdiction. The respondent considered the matter afresh, and agreed with the finding of the appellate authority that though the tramaction was supported by valuable considerativn it could not be said to have been enter-ed into in good faith. In support oft.his conclusion he reliP,d on the conduct of the vendor, the haste with which the transaction W<1S attempted to be completed and the anxiety disclos<'d by him in his Jetter to Mohideen. In substance the respondent came to the conclusion that the \'endor wanted to evade the res-trictions of the evacuee Jaw which he knew would soon be extended to Madras, and that showed that he was not acting in good faith. It is on this view that the revisional application preferred before him by the appellant was dismissed by him on July 4, 1954. ln his opinion the appellant's cr.se ff'll under s. 40(4)(a) of the Act. He did not, therefore, consider the ques-tion about the applicability of s. 40(4)1c).

It is clear that if trausaction is affected by absence of good faith either in the vendm- or the vendee its confirmation may properly be rejected under s. 40(4)(a); in other words, good faith is required both in the vendor and the vendee. In that sei18e the provisions of s. 40(4)(a) a.re more rigorous ancl stringent than those of s. 53(1) of the Transfer of Property Act. Under the latter section which deals with fraudulent transfers the rights of transferee in good faith and for consideration are expressly protected; that,however, is not the position under s. 40(4}(a). Therefore '9[6]' the fact that the appellant paid valua'ble consideration Rabia Bai for tho transaction and is not shown to have acted v. otherwi'e than in good faith in entering into the Custodian-General transact.ion would not. justify her claim for confirma-[0]1 faacuee Prop"'>' tion of the said tranoactiou if it is shown that the . d--dk . j . . . . .a;en raga ar 1 . vendor !tad not acted m goo< a1t m entenng mto the said tranoaction. Tbe fa,d that corrnideration was paid by the appellant and that she was acting in gnod faith may perhaps be relevant in determining the character of her conduct in regard to the transaction; but it would not be relevant or material in determin-ing the character of the conduct of the vendor in relation to the transfrr. This pusition is not seriously disputed before us.

Mr. Sastri, however, contends that in considering the good faith of the vendor it would be necessary to bear in mind that at the relevant timo wlteii negotiations were going on between the pa.rties in respect of the transactwu in question evacuee law had not been applied to Madras, and so evacuees like the appellant's vendor were absolutely free to deal with their proper-ties as they liked. He also attempted to 11rgue that even where the evacuee law applied, the policy adopted by the Government of India was to confirm transfers ma.de by i\lohammedan evacuees in favour of Indian nationals unless certificate signed by the prescribed income-tax authority certifying that the transferor had paid all taxes due from him to the income-tax depart-ment in respect of his property, business or under-taking, or has made satisfactory arrangements for the payment thereof, had not been produced, and unless he had failed to pay any uther dues outstanding against him in the Custodian', register in respect of his own property and third party claims recognised ex parte by the Custodi<>11. This argument. is based upon copy of the press note alleged to have been issued by the Government of India in the Ministry of Rehabilita-tion on May 13, 1949. On the other hand, the learned Additional Solicitor-General has relied on copy of circular issued hy the Govprnment oflndia. on March 9, 1950, where it has heel) stated that the instructions

·'9[6]' issued by the Government of India are subject to other Rabia Bai requirements of s, 38(4) of the Central Ordinance No. v, XXVII of 1949; in other words, whatever may be the custodian-Gen,.al nature of the circulars and directions issued by the >/Evacuee Properly Government of India, the appropriate authorities -administering the provisions of the evacuee bw had to Gajsndragadkar 1- deal with the matters brnught before them under the relevant provisions of the said law. We do not think we can attach much importance to the argument that even where the evacuee law applied confirmation of sale transactions was intended to be automatic subject to the satisfaction of the two conditions specified in the press note. We are bound to assume that the question about confirming sale transactions was required to be, and was in fact, dealt with by the appropriate autho-rities under the relevant statutory provisions which were in force at the material time. It is, however, true that no evacuee law had been extended to Madras '.lot the time when the impugned transaction was com-pleted, and that naturally raises the question as to whether if transaction had been entered into deliber-ately and consciously with the object of evading the application of evacuee law which it was apprehended would soon be extended to Madras, does that fact attract the provisions of s. 40(4)(a) of the Act? As we have already indicated the respondent has answered th.is question in the affirmative, and Mr. Sastri contends that this conclusion is erroneous in law. Mr. Sastri's argument is that the expression "good faith" in s. 40(4)(a) should be construed in the sense attributed to the said expression bys. 3, sub-s. (22) of the General Clauses Act, X of 1897. The said provi-sion lays down that thing shall be deemed to be done in good faith where it is in fact done honestly whether it is done negligently or not. The argument is that the vendor could not be said to have acted dishonestly when no evacuee law applied to Madras, and an inten-tion to avoid law which may be applied to Madras in future cannot be said to introduce an element of dishonesty in his conduct. In our opinion this argu-ment cannot be accepted. In this connection it is necessary to bear in mind that s, 3 of th<J General

Clauses Act itself provides that the definitions pre-•9-0• scribed by the said section are applicable "unless there · Rabia Bai is anything repugnant in the subject or context", and v. so it would not be unreasonable to hold that the con- custodian-G.,..,al tent of the expression "good~ faith " would depend of Evae1m Prop ... 11 substantially on the context of the statute which uses --it. In determining the denotation of the said expression Gajendragadkar}. in s. 40(4)(a) it would be essential to take into account the scope and effect of the main provisions of s. 40(1). As we have already noticed, this section provides, inter alia, that no transfer made after the 14th day of August, 1947, shall be effective so as to confer any rights in respect of the said transfer on the parties thereto if, at any time after t.he transfer, the transferor becomes an evacuee within the meaning of s. 2, or' the property of the transferor is declared or notified to be an evacuee property wit.hin the meaning of the Act, unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act. It would thus be clear that all transfers made after the 14th day of August, 1947, but before the 7th day of May, 1954, are hit by this section, and that obviously would bring within the mischief of the section large number of transfers effected at time when no evacuee law was in force in respect of them. Reading s. 40( l) and ( 4,) together it appears that the transfers hit by the former provision would be valid only if they are confirmed under the latter provision. It is possible that transfer made during the prohibited period may have been entered into in good faith or was for valuable con-sideration and did not attract any of the provisions contained in els. (a), (b) and (c) of s. 40(4). In such case merely because it was affected within the prohibited period it would not become void and the Custodian may have to confirm it; but where such transfer attracts the. provisions of s. 40(4)(a) for instance, it would not 'be affirmed and it would remain inoperative. This shows that the main object of the Aot was to preserve,t_he property of persons who had· migrated to Pakistan till the Government of'India could come to some understanding with the Pakistan Government in.regard to . 8.djus~ment ~ of claims of Indian .

Z9[61 ]evacuees in respect of the properties left by them in Rabi• Bai Pakistan. The idea then presumably was that the two v. Governments should agree on the valuation of the ... 1odiaiM;en1ra1 evacuee properties left by evacuees in the two respec-0/ £"""""Property tive countries and the difference in the said valuation ·....i --should be amicably adjusted between them. After such •J ••g•dk•r f. adjustment was made it was intended to compensate the evacuees in regard to the loss incurred by them in respect of the properties left by them in the two respective countries. That this intention did not succeed is another matter. There can, however, be no doubt about the policy and object of the Act, and in determining the content of the expression " good faith" in the context of the main provision of s. 40(1) this· object and policy of the Act must be borne in mind.·Section 40( 4) refers to three kinds of cases where the transfer may not be confirmed; cl. (a) . deals with transactions which are not entered into in good faith or for valuable consideration; cl. (b) deals with tran-sactions which are prohibited under any law for the time.being in force; and cl. (c) deals with cases of transactions which are not confirmed for any other reason. It would thus be seen that the scope of the three clauses is very wide. It is not only transactions prohibited under any law that fall within the mischief of s. 40(4); but transactions which are not entered into in good faith or for valuable consideration also fall within its mischief. Now, if the test prescribed by s. 3(22) of the General Clauses Act as interpreted by Mr. Sastri is held to be relevant large number of transactions may have to be confirmed even though they are shown to have been deliberately entered into with the object of evading the provisions of s. 40(1). In our opinion, the fact that the evacuee law had not been extended at the relevant time to Madras would not be decisive in the matter. It was well known that the said law was being extended from Province to Province as it was deemed necessary, and indeed the letter written by tlie ve.ndor to Mohideen clearlv shows that the vendor knew as much. The history of the evacuee laws passed in several States and by the

3 S.C.R.

Central Government and Legislature from time to time 1961\ shows that the Legislatures were attempting to meet Rabi• Bai with an unprecedented problem, and the laws passed v. by them in India and Pakistan at the material time Cuslodian-General made it perfectly clear to the evacuees from both the of Evacuee Proper•y countries that the two countries were adopting appro-. --priate legislative measures to protect the evac~ee Ga;emlraga4/iar J. properties and prevent their transfers. Therefore, if vendor sold his property not for any necessity or for any other legitimate purpose but solely with the object of converting it into cash and removing it to Pakistan, that clearly was intended to defeat the provisions of the Act which he knew would soon be extended to Madras, and so it would be U.ifficult to hold that he was acting honestly within the meaning of s. 40(4)(e.) of the Act. An intention to defeat the provisions of the Act cannot be said to be honest in the context. If despite his inteRtion to defeat the application of the Act transaction is upheld as ente.red into in good faith many transactions may escape the application of s. 40(1), and that clearly would defeat the purpose of the Act. It is significant that though the provisions of s. 40(1) are drastic they have been deliberately made retrospective, and that emphatically brings out the aim and object of the Act; and it would be un-reasonable to ignore this aim and object of the Act in construing the expression "good faith" in s. 40(4Xa). We would, therefore, hold that having regard to the aim and object of the emergency legislation with which we are concerned in the present case the expres-sion " good faith " used in s. 40( 4X a) has been properly construed by the respondent when he held thl!ot deliberate intention to defeat the apprehended appli-cation of the evacuee law which was responsible for · the transfer in question brings the transfer within the mischief of s. 40(4)(a).

The result is the appeal fails and is dismissed with costs.

Appeal dismissed.