Dr. Mohammad Saheb Mahboob Medico vs The Deputy Custodian-General

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 456 of 1958

Decision Date: 25 April 1961

Coram: K.C. Das Gupta, P.B. Gajendragadkar, A.K. Sarkar, K.N. Wanchoo, N. Rajagopala Ayyangar

In this case the Supreme Court of India delivered its judgment on 25 April 1961, authored by Justice K C Das Gupta and decided by a bench consisting of Justices K C Das Gupta, P B Gajendragadkar, A K Sarkar, K N Wanchoo, and N Rajagopala Ayyangar.

The petitioner was Dr Mohammad Saheb Mahboob Medico and the respondents were the Deputy Custodian‑General and another connected party. The citation of the decision is reported in 1961 AIR 1657 and 1962 SCR (2) 371, with citator reference R 1974 SC2349 (10).

The matter involved the Administration of Evacuee Property Ordinance, 1949 and the Administration of Evacuee Property Act, 1950, particularly section 2(d)(iii) of the Ordinance and section 22(b) of the Act, which dealt with the declaration of evacuee property when a person transferred assets to Pakistan.

The Court noted that the appellant had been held an evacuee under section 2(d)(iii) of the 1949 Ordinance and that his property was declared evacuee property under section 22(b) of the 1950 Act because he had transferred a substantial portion of his assets to Pakistan. The relevant portion of section 22(b) reads: “If the Custodian is satisfied, after such enquiry as may be prescribed, that the circumstances relating to any person, in respect of whom a declaration has been made on the ground that after the 14th day of August 1947 and before the 18th day of October 1949 he has transferred to Pakistan his assets or any part thereof situated in any part of the territories to which this Act extends, are such as may be prescribed as constituting a preparation for his migration to Pakistan, the Custodian may declare any property situated in the State in which such person has any right or interest to be evacuee property ….”

The appellant advanced two principal contentions. First, he argued that section 22(b) contravened Article 14 of the Constitution. Second, he contended that the circumstances of his substantial asset transfer should be examined only with respect to an act performed after he had been declared an intending evacuee.

The Court held that the persons who transferred assets between 14 August 1947 and 18 October 1949 and those who transferred assets after 18 October 1949 were not similarly situated, and therefore the denial of identical benefits to the two groups did not breach the equal‑protection clause of Article 14. Moreover, the Court clarified that the fact of a substantial asset transfer could be considered for an order under section 22(b) irrespective of whether the transfer occurred before or after the declaration of the person as an intending evacuee.

This judgment was rendered in civil appellate jurisdiction for Civil Appeal No 456 of 1958, arising by special leave from the judgment and order dated 10 May 1957 of the Rajasthan High Court, Jaipur Bench.

In D. B. Civil Reference No. 17 of 1956 together with Petition No. 87 of 1961, a petition was filed under Article 32 of the Constitution of India seeking enforcement of fundamental rights, and counsel for the petitioner and counsel for the respondents were instructed to appear before the Court. The petition was listed on 25 April 1961 and the judgment was delivered by Justice Das Gupta. On 1 April 1950 the Deputy Custodian of Jaipur issued an order in proceedings commenced under section 19 of the Administration of Evacuee Property Ordinance declaring the appellant, Dr Mohammad Saeed, a medical practitioner of Jaipur, to be an intending evacuee, and the same order directed that a notice be served on the respondent requiring him to show cause why he should not be declared an evacuee under sections 2(d)(i) and 2(d)(iii) of the Ordinance. When the Administration of Evacuee Property Act 1950 (Act XXXI of 1950) subsequently came into force, another notice was issued to the appellant under section 22(b) of that Act, requiring him to show cause why his property should not be declared evacuee property on the ground that he had transferred a substantial portion of his assets to Pakistan. On 16 November 1951 the Deputy Custodian of Jaipur held Dr Saeed to be an evacuee under section 2(d)(iii) of the 1949 Ordinance, and he also held that Dr Saeed’s property was evacuee property under section 7 of the Ordinance as well as under section 22(b) of the 1950 Act. The appellant appealed this declaration, and the District Judge of Jaipur set aside the declaration of Dr Saeed as an evacuee under section 2(d)(iii) of the Ordinance, remanding the case for a fresh decision in view of the observations he had made. Regarding the order under section 22(b), the District Judge accepted the evidence that Dr Saeed had transferred a substantial portion of his assets to Pakistan between November 1947 and September 1948, but he expressed the opinion that not only that transfer, which occurred before 18 October 1949, but also other circumstances, including the appellant’s conduct after that date, had to be considered before action could be taken under section 22(b); finding it difficult to conclude that the appellant was preparing for migration, he therefore set aside the Deputy Custodian’s order made under section 22(b). The Custodian of Evacuee Property, Rajasthan, then moved the Custodian‑General of Evacuee Property for revision of that order. The Deputy Custodian‑General who heard the revision could not agree with the District Judge’s findings on the question of the order under section 22(b) and consequently made a reference under section 27(2) of the 1950 Act to the High Court of Rajasthan. The High Court rejected the contention raised on behalf of the appellant that the circumstances of the transfer of a substantial portion of his assets should be related only to an act done after he had been declared an intending evacuee.

In its reasoning the Court observed that the transfer of an individual’s assets could be regarded as a preparatory act only when it was carried out by a person after that person had been officially designated as an intending evacuee. The Court further held that during the period stretching from 14 August 1947 to 18 October 1949 Dr Mohammad Saeed had transferred a substantial portion of his assets located in India to Pakistan, and that such transfer, under the applicable law, amounted to a preparation for his migration to Pakistan. Because the transfer fell within the statutory definition of preparation for migration, the Court concluded that the Custodian was justified in declaring the property situated in Rajasthan, over which Dr Mohammad Saeed claimed a right or interest, to be evacuee property. Accordingly, the High Court set aside the earlier decision rendered by the District Judge concerning the orders issued by the Deputy Custodian‑General under section 22(b). The High Court then directed that either the Custodian‑General or, if duly authorized, the Deputy Custodian‑General should proceed with the matter in accordance with the High Court’s own decision. Following the High Court’s direction, the Deputy Custodian‑General on 10 August 1957 affirmed that the petitioner's property had been correctly declared evacuee property pursuant to section 22(b) by the Deputy Custodian. An appeal against this determination was filed after special leave was granted by the Supreme Court. After a partial hearing of the appeal on 23 January 1961, the matter was adjourned so that the appellant could file a writ petition. Subsequently, on 14 February 1961, a petition was filed under article 32 of the Constitution, seeking a writ of certiorari or mandamus, or any other appropriate direction, with the purpose of setting aside the order made under section 22(b).

The appeal and the writ petition were scheduled to be heard together. Because the writ petition challenged the constitutional validity of the provision contained in section 22(b), the Court deemed it appropriate and convenient to consider the petition before addressing the appeal. Among the several grounds asserted in the petition against the validity of section 22(b), only one ground—the contention that section 22(b) violated article 14 of the Constitution—was pressed before the Court. The petition originally alleged that discrimination arose between persons who had been declared intending evacuees and for whose property proceedings had commenced prior to the commencement of the Act, and persons whose property proceedings had not yet begun; it further claimed that article 14 was breached because an individual declared an intending evacuee and who had performed an act listed as a preparation for migration was denied the opportunity to demonstrate that he had no actual intention to migrate and had made no such preparations, thereby imposing upon him a severe penalty. Neither of these substantive contentions was raised during the hearing. The sole argument presented by counsel for the petitioner on the question of a possible article 14 violation was that, in two separate instances, discrimination existed between an intending evacuee whose property had been declared evacuee property under section 22(b) and an evacuee whose property might also be declared evacuee property.

The Court observed that the property involved belonged to an evacuee who had acted in practically the same way as another person who had been declared an intending evacuee. It further explained that, under section 2(d)(iv) of the Administration of Evacuee Property Act, 1950, as amended by Act 11 of 1953, any person who, after the eighteenth day of October 1949, transferred his assets to Pakistan without first obtaining the Custodian’s approval was deemed an evacuee, and consequently all of his assets situated in the territories covered by the Act became evacuee property within the meaning of the statute.

The Court then described the procedural consequences of such a declaration. When an order under section 7 of the Act declares any portion of that person’s assets to be evacuee property, the evacuee or his heir may file an application for restoration of the property under section 16. After a proper inquiry, the Central Government may, subject to the conditions laid down in section 16, issue an order restoring the property to the applicant.

In addition, the Court pointed out that a person who qualifies as an evacuee under section 2(d)(iv) is also entitled to the benefit of section 13 of the Displaced Persons (Compensation and Rehabilitation) Act (XLIV of 1954). Under that provision, whenever the property of an evacuee is acquired in accordance with section 12 of the same Act, the evacuee is to be paid compensation for his loss, the amount and manner of payment being determined in accordance with principles mutually agreed between the Governments of India and Pakistan.

The Court turned to the situation of the petitioner, who had transferred his assets between the fourteenth day of August 1947 and the eighteenth day of October 1949. It held that such a transfer placed the petitioner within the definition of “intending evacuee” contained in section 2(e)(i) of the Administration of Evacuee Property Act. Once a declaration under section 19 had been made that he was an intending evacuee, his property became liable to be declared evacuee property under section 22(b). However, because the transfer occurred before the cut‑off date of October 1949, the petitioner was not eligible for the restoration right provided in section 16 of the 1950 Act, nor could he claim compensation under section 13 of the 1954 Displaced Persons Act.

Finally, the Court summarized the effect of the 1953 amendment. It stated that any person who transferred assets to Pakistan after October 18 1949 without the Custodian’s prior approval became an evacuee in law, his property could be declared evacuee property, and he retained the right to seek restoration under section 16 as well as to receive compensation under section 13 of the 1954 Act. By contrast, a person who transferred assets between August 14 1947 and October 18 1949 was only an intending evacuee, his property could be declared evacuee property, but he was excluded from the benefits of section 16 and the compensation scheme of section 13.

In this case, the Court noted that a person who had transferred his assets or any part of his assets to Pakistan during the period from the fourteenth day of August 1947 to the eighteenth day of October 1949 was liable to be declared an intending evacuee at any time before the Amended Act of 1953 came into force. The Court explained that, once such a declaration had been made, any property belonging to that person could be declared evacuee property under section twenty‑two of the Administration of Evacuee Property Act at any time before chapter four of that Act was repealed by the 1953 amendment, and even after that date if a proceeding under section twenty‑two was pending on the commencement date of the 1953 Act. However, the Court observed that a person falling within this category would not be entitled to the benefit of section sixteen of the Administration of Evacuee Property Act, 1950, nor to compensation under section thirteen of the Displaced Persons (Compensation and Rehabilitation) Act, XLIV of 1954.

The learned counsel contended that this denial of benefits under section sixteen of the 1950 Act and section thirteen of the 1954 Act to someone declared an intending evacuee on the ground of asset transfer to Pakistan amounted to a denial of equal protection of the laws. The counsel further argued that section twenty‑two (b) of the Administration of Evacuee Property Act, as it stood before being repealed along with other provisions of chapter four, should be held void. The Court found this contention not to be well founded. It pointed out that a person who transferred assets between fourteen August 1947 and eighteen October 1949 could not be properly considered to be in the same circumstances as a person who transferred assets after eighteen October 1949. The Court emphasized that political relations between India and Pakistan were fluid and disturbed immediately after fourteen August 1947, but had improved considerably by eighteen October 1949, the date on which the Administration of Evacuee Property Ordinance, 1949, was enacted. Consequently, the legislature could reasonably have regarded persons who transferred assets during the earlier period as forming a distinct class for the purpose of applying the law to their property, distinct from those who transferred assets after the later date.

The Court stated that it was not concerned with the reasons or the wisdom of the policy that denied the benefits of section sixteen of the 1950 Act and section thirteen of the 1954 Act to those declared intending evacuees because of transfers between the specified dates, while granting those benefits to evacuees under the law as amended in 1953 for transfers after eighteen October 1949. What was clear, the Court concluded, was that the two groups were not similarly situated, and therefore the denial of equal benefits to the two groups did not infringe the guarantee of equal protection of the laws.

In this case the Court explained that the two groups of persons were not in the same situation and that the refusal to grant equal benefits to the two groups therefore did not breach the constitutional guarantee of equal protection of the laws. The Court further observed that the disparity – namely that one group enjoyed the benefits of the statutory provisions mentioned earlier while the other group did not – did not arise directly or necessarily from section 22(b). According to the Court, what is described as discrimination between an evacuee and an intending evacuee is the result of the legislature’s decision not to extend to intending evacuees the benefits of section 16 of the 1950 Act and section 13 of the 1954 Act, as earlier noted, and not a consequence of the provisions of section 22(b) which merely empower the Custodian, under certain specified circumstances, to declare the property of an intending evacuee as evacuee property. Consequently, the Court held that it could not be said that section 22(b) of the Administration of Evacuee Property Act offends article 14 of the Constitution. Accordingly, the petition filed under article 32 of the Constitution was dismissed with costs. The appeal, however, raised the question of the effect of applying section 22(b) to the facts of the present case. The Court reproduced the wording of section 22(b) after substituting the phrase “he had done any of the acts specified in sub‑clauses (i) and (iii) of clause (e) of section 2” with the words of only clause 2(e)(i). The provision reads: “If the Custodian is satisfied, after such enquiry as may be prescribed, that the circumstances relating to any person, in respect of whom a declaration has been so made on the ground that after the 14th day of August 1947 and before the 18th day of October 1949 he has transferred to Pakistan his assets or any part thereof situated in any part of the territories to which this Act extends are such as may be prescribed as constituting a preparation for his migration to Pakistan, the Custodian may declare any property situated in the State in which such person has any right or interest to be evacuee property and on the issue of such notification any property specified in the notification shall be deemed to be evacuee property which has vested in the Custodian within the meaning of this Act.” The Court then highlighted the explanatory clause attached to the section, which states: “Explanation – The following shall be deemed to be some of the circumstances prescribed under clause (b), namely – (i) the transfer to Pakistan by any person referred to in that clause of a substantial portion of his assets situated in any part of the territories to which this Act extends, or (ii) the acquisition of, or the declaration of an intention to acquire, Pakistan nationality by any such person.” Finally, the Court noted that the expression “so made” indicates that a declaration has been made under section 19 of the Act declaring the person to be an intending evacuee, and that this declaration is no longer in dispute.

It was not disputed that Dr. Mohammad Saeed, prior to the issuance of the order that is the subject of this appeal, transferred a substantial portion of his assets located in Jaipur to Pakistan. Jaipur lies within the territory to which the Act applies. The parties also agreed that this transfer occurred before any declaration was made that Dr. Saeed was an intending evacuee. The appellant’s principal argument was that because the transfer happened before the declaration of intention to evacuate, the transfer could not be taken into account when considering an order under section 22(b) of the Act. The court found this argument to be without merit. By applying the ordinary grammatical sense of the statutory language, the court observed that the legislation expressly states that the transfer of a substantial portion of a person’s assets to Pakistan constitutes one of the circumstances specified in clause (b), regardless of whether the transfer took place before or after the declaration that the person is an intending evacuee. The only requirement, the court noted, is that the circumstance must relate to a person about whom a declaration of intending evacuee status has been made. There is no basis in the statute for the proposition that such circumstances must arise only after the declaration. The court further explained that the purpose of the law appears to be that the mere fact of transferring any portion of a person’s assets to Pakistan is enough to justify a declaration that the person is an intending evacuee. A subsequent declaration that the property is evacuee property follows when the transferred assets constitute a substantial portion of the person’s total holdings.

The court added that in some situations the portion transferred before the declaration may be relatively small. If, at a later date, additional assets are transferred to Pakistan and the combined transfers amount to a substantial portion of the total assets, the property will then be liable to be declared evacuee property. The court rejected any reasoning that a substantial transfer made before the declaration should not trigger liability, calling such a view illogical. Moreover, the court emphasized that the language of the statute clearly intends that the circumstance of transferring a substantial portion of assets is relevant to an order under section 22(b) whether the transfer occurred before or after the person was declared an intending evacuee. The appellant also contended that the Custodian should be allowed to consider other factors, including the later conduct of the intending evacuee, before deciding to declare the property evacuee property. The court indicated that it was unnecessary to examine that contention further.

In this case, the legislation allows the Custodian to examine additional circumstances beyond those expressly listed. The provision nevertheless confers on the Custodian the power to declare the property of any person who, having been officially designated as an intending evacuee, possesses assets that fall within any of the conditions identified as evidence of preparation for migration to Pakistan. When the relevant facts satisfy any one of those prescribed conditions, the Custodian may, in the exercise of that statutory authority, make a declaration that the assets are evacuee property. The Court observed that, as the facts of the present matter demonstrate, the Deputy Custodian exercised this power and issued such a declaration. There is no legal basis to contend that the declaration was made without proper authority or that it was otherwise invalid. The Court further held that the High Court had correctly set aside the earlier order of the District Judge and had properly directed the Custodian‑General or the Deputy Custodian‑General to determine the issue in line with the High Court’s assessment. Specifically, the High Court concluded that, on the basis of the evidence established, the order entered by the Deputy Custodian declaring the property of Dr Mohammad Saeed to be evacuee property was proper. Accordingly, the subsequent order issued by the Deputy Custodian‑General in compliance with the High Court’s direction cannot be challenged. For these reasons, the appeal was dismissed, and costs were awarded to the respondent.