Memon Abdul Karim Haji Tayab vs Deputy Custodian General, New Delhi
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeal No. 119 of 1963
Decision Date: 19 February 1964
Coram: K.N. Wanchoo, P.B. Gajendragadkar, K.C. Das Gupta, J.C. Shah, N. Rajagopala Ayyangar
In the matter titled Memon Abdul Karim Haji Tayab versus Deputy Custodian General, New Delhi, the Supreme Court of India delivered its judgment on 19 February 1964. The judgment was authored by Justice K N Wanchoo and the bench was composed of Justices K N Wanchoo, P B Gajendragadkar, K C Das Gupta, J C Shah, and N Rajagopala Ayyangar. The petitioner was Memon Abdul Karim Haji Tayab and the respondents included the Deputy Custodian General of New Delhi together with other parties. The citation for this decision is reported in 1964 AIR 1256 and 1964 SCR (6) 780. The case concerned the Administration of Evacuee Property Act, 1950, as amended by Act No 91 of 1956, specifically section 48, and also involved the Limitation Act, 1908, article 60.
The factual background recorded that the petitioner’s sister had deposited a sum of Rupees 85,000 with the petitioner in January 1946. Subsequently, the sister migrated to Pakistan sometime between June and August 1949. The Assistant Custodian later issued a demand that the petitioner pay the deposited sum under section 48 of the Administration of Evacuee Property Act, 1950. The petitioner contended that the amount could not be recovered because it had been given to him as a loan and that any claim for recovery was barred as of January 1949. The Assistant Custodian rejected this contention and directed the petitioner to pay the amount pursuant to the provisions of section 48 as they stood at that time. That decision was affirmed on appeal and again on revision.
Following those proceedings, the petitioner filed a writ petition before the High Court, which was dismissed by a single judge. The petitioner then appealed to a larger bench of the High Court. On 9 December 1957, that bench held that the amount was not recoverable under section 48 of the Act as it existed at the relevant time. During the pendency of that decision, section 48 was amended by the amendment dated 22 October 1956. On 22 January 1958, the Assistant Custodian served another notice of demand on the petitioner, again invoking section 48, now in its amended form, to recover the sum.
The petitioner appealed this demand to the Custodian‑General. The Custodian‑General allowed the appeal and remanded the matter for further inquiry as directed by him. After the remand, additional evidence was taken and it was concluded that the amount remained payable by the petitioner because it was a deposit and remained recoverable when the property vested in the Custodian. The petitioner again appealed to the Custodian‑General, and that appeal was dismissed. Subsequently, the petitioner applied for special leave to appeal to this Court, and special leave was granted, leading to the present appeal.
The Court held that sub‑sections 1 and 2 of the amended section 48 of the Administration of Evacuee Property Act are expressly procedural. Accordingly, those procedural provisions apply to all cases that must be investigated under the Act after 22 October 1956, even where the underlying claim arose before the amendment was enacted.
In this case the Court explained that when a statute is amended procedurally, the amendment applies to all proceedings that occur after the amendment takes effect, even if those proceedings originated before the amendment or are based on a claim that arose earlier. Accordingly, when the Assistant Custodian issued a notice to the appellant on 22 January 1958 demanding payment, the recovery could be governed by sub‑sections (1) and (2) of the amended Administration of Evacuee Property Act, because those provisions are merely procedural in nature and therefore applicable to actions taken after the amendment became operative.
The Court further observed that the property which vested in the Custodian was not the cash physically possessed by the appellant, who must be treated as a banker with respect to that money. Rather, the vested property consisted of the appellant’s sister’s right to recover the amount from the appellant, which is an incorporeal, actionable claim. The Custodian was therefore entitled to invoke sections (1) and (2) of the amended Act to recover the sum representing that actionable claim. The Court noted that the Custodian could not rely on section 9 to seize the money in hand, because the amount did not constitute specific property that could be physically taken under that provision. Regarding limitation, the Court held that because the sum was a deposit, the limitation period would begin to run only from the date a demand was made. No evidence showed that the appellant’s sister had demanded repayment before she migrated to Pakistan, and therefore the limitation period had not yet commenced on the date of her migration, assuming that Article 60 of the Limitation Act No. 9 of 1908 applied. Consequently, the sister’s right to recover the amount, which had vested in the Custodian, was not barred by limitation or by the fact that she became an evacuee. The appeal, taken by special leave, concerned whether the appellant was liable to pay Rs 85,000 to the Custodian. The civil appeal No 119 of 1963 arose from the order dated 16 January 1961 of the Deputy Custodian‑General, New Delhi, in Appeal No 172‑A /SUR/1960. Counsel for the appellant and counsel for the respondents appeared, and the judgment was delivered on 19 February 1964 by Justice Wanchoo.
The Court recorded that the appellant had received a sum of money from his sister in January 1946. The total amount deposited by the sister was ninety thousand rupees, of which she later withdrew five thousand rupees, leaving a balance of eighty‑five thousand rupees in the appellant’s possession. Subsequently, the sister migrated to Pakistan sometime between June and August 1949. After her migration, the Assistant Custodian General issued a demand that the appellant repay the remaining eighty‑five thousand rupees, invoking section 48 of the Administration of Evacuee Property Act, No. XXXI of 1950 (referred to as the Act). The appellant opposed the demand on the ground that the money had been advanced to him as a loan and that the limitation period for recovery had expired in January 1949, which was before his sister’s migration; consequently, he argued that the amount could not be recovered from him. The Assistant Custodian, however, directed that the sum be recovered as arrears of land revenue under the then‑existing provision of section 48. The appellant appealed this decision before the Custodian of Saurashtra, but the appeal was dismissed. He then filed a revision petition before the Custodian General, which likewise failed.
Thereafter, the appellant instituted a writ petition before the Saurashtra High Court in 1955. A learned Single Judge dismissed the petition, but the appellant obtained relief on a Letters Patent Appeal, and the High Court held, in a decision dated 9 December 1957, that the amount was not recoverable under the version of section 48 then in force. While the appeal was pending, section 48 was amended by Act No. 91 of 1956, effective from 22 October 1956, a modification that the Court later considered. After the High Court judgment in the appellant’s favour, the Assistant Custodian issued a fresh notice of demand on 22 January 1958. Following a hearing of the appellant’s objections, the Assistant Custodian again ordered recovery of the sum. The appellant appealed once more to the Custodian General, who, in August 1958, allowed the appeal and remanded the matter for further inquiry as directed by him. The Custodian General held that the amended provision of section 48 applied to the new proceedings initiated by the January 1958 notice. He further opined that the amount could be recovered under the amended section only if it was due to the evacuee at the time the evacuee’s property vested in the Custodian. Accordingly, the Court needed to determine the exact date of the sister’s migration and whether the amount was due to her on that date, thereby assessing whether the limitation period had already barred the claim. The Custodian General also expressed that it was necessary to decide whether the transaction constituted a loan or a deposit, since the two categories attract different limitation periods. For these reasons, the matter was remanded for factual determination in accordance with the directions given.
After the Custodian General remanded the dispute for further enquiry, the authority issued specific directions that the facts be drawn out in accordance with those instructions. In compliance with the directions, a fresh round of investigation was undertaken and additional documentary and testimonial evidence was placed before the Custodian. On the basis of that evidence the Custodian arrived at the conclusion that the sum claimed from the appellant was not a loan but a deposit made by the appellant’s sister, and that the deposit remained recoverable at the moment when the appellant’s property vested in the Custodian. Acting on this finding, the appellant filed a second appeal before the Custodian General. The Custodian considered the appeal and dismissed it on 6 February 1961. Dissatisfied with that determination, the appellant then applied to the Supreme Court for special leave to appeal the decision of the Custodian General. The Supreme Court granted the special leave, and consequently the present proceedings have been instituted before this Court for final determination of the issues raised by the appellant.
The appellant has asked this Court to decide two distinct questions. The first question is whether the amendment to section 48 of the Evacuees (Recovery of Possession) Act, which was introduced by Act No 91 of 1956 and came into force on 22 October 1956, is applicable to the facts of the present case. The second question is whether the claim advanced by the Custodian is barred by limitation on the ground that the transaction between the appellant and his sister should be characterised as a deposit rather than a loan. Section 48, as amended, reads in full as follows: “48. Recovery of certain sums as arrears of land revenue: (1) Any sum payable to the Government or to the Custodian in respect of any evacuee property, under any agreement, express or implied, lease or other document or otherwise however, may be recovered in the same manner as an arrear of land revenue. (2) If any question arises whether the sum is payable to the Government or to the Custodian within the meaning of sub‑section (1), the Custodian shall, after making such inquiry as he may deem fit, and giving to the person by whom the sum is alleged to be payable an opportunity of being heard, decide the question; and the decision of the Custodian shall, subject to any appeal or revision under this Act, be final and shall not be called in question by any court or other authority. (3) For the purpose of this section, a sum shall be deemed to be payable to the Custodian notwithstanding that its recovery is barred by the Indian Limitation Act, 1908 (9 of 1908), or any other law for the time being in force relating to limitation of action.” The provision is essentially procedural and replaces the earlier version of section 48. It provides that any sum that falls within its scope may be recovered as arrears of land revenue, that any dispute as to liability must be investigated by the Custodian who must afford the disputing party a hearing, and that the Custodian’s decision, subject only to the limited remedies of appeal or revision provided under the Act, is final and not open to challenge by any court or other authority. Finally, the amendment expressly declares that a sum is to be treated as payable to the Custodian even if, under the Indian Limitation Act or any other applicable limitation law, its recovery would otherwise be barred.
The Court observed that the provision stating that recovery is barred by the Indian Limitation Act or any other law relating to limitation of action was procedural in nature. Sub‑sections (1) and (2) were clearly procedural and would apply to all cases that had to be investigated in accordance therewith after 22 October 1956, even though the claim might have arisen before the amendment was inserted in the Act. It is well settled that procedural amendments to a law, unless expressly stated otherwise, operate retrospectively in the sense that they apply to all actions after the date they come into force, even though the actions may have begun earlier or the claim on which the action is based may be of an earlier date. Accordingly, when the Assistant Custodian issued a notice to the appellant on 22 January 1958 claiming the amount from him, the recovery could be dealt with under sub‑sections (1) and (2) of the amended section 48, as they were merely procedural provisions. The appellant, however, contended that sub‑section (1) in terms did not apply to the present case and, if it did not, sub‑section (2) would also be inapplicable. The appellant argued that sub‑section (1) permitted recovery only of any sum payable to the Government or to the Custodian in respect of any evacuee property, and therefore the evacuee property itself could not be recovered under sub‑section (1); the provision, the appellant said, only authorised recovery of a sum payable in respect of evacuee property. In support of this argument, the appellant referred to section 9 of the Act, which provides that if any person in possession of evacuee property refuses or fails on demand to surrender possession to the Custodian, the Custodian may use such force as may be necessary to take possession, and may, after giving reasonable warning and facilities to any woman not appearing in public to withdraw, remove or break open any lock, bolt or door or do any other act necessary for that purpose. The appellant thus maintained that the Custodian could take action for recovery of evacuee property only under section 9. The Court held that this argument was misconceived. Section 9 dealt only with the recovery of immovable property or specific movable property that could be physically seized; it did not cover incorporeal evacuee property that might vest in the Custodian, such as an actionable claim. Actionable claims, the Court noted, were dealt with by section 48 as amended read with section 10(2)(i). The Court also rejected the contention that the amount of Rs 85,000 involved in the case constituted evacuee property. While section 48 as amended allowed the Custodian to take action for recovery of such sums, the amount in question was not itself evacuee property.
In this case the Court explained that section 48 of the Act empowers the Custodian to recover any sum that is due in respect of evacuee property. Even if the sum of Rs 85,000 that was deposited with the appellant is characterised as evacuee property, the Custodian would not be able to act under sub‑sections 1 and 2 of section 48 with respect to the cash itself. The Court observed, however, that the property which actually vested in the Custodian was not the physical money that lay with the appellant, who must be treated as a banker with respect to that cash. Instead, the vested property was the right of the appellant’s sister to obtain the amount from the appellant, and that right was an incorporeal right existing as an actionable claim. Consequently, it is that actionable claim that the Custodian may pursue under section 48, sub‑sections 1 and 2, to recover the sum payable in respect of that claim. The appellant’s contention that sub‑section 1 of section 48 does not apply to the recovery of this money therefore fails. The Custodian is entitled to recover the amount because it is payable in respect of the evacuee property belonging to the appellant’s sister – namely, her right to recover the money from the appellant – and that right had vested in the Custodian. The Court further noted that the Custodian could not rely on section 9 by physically seizing the cash, because the amount cannot be treated as a specific, seizable property under that provision. If the sister possessed the right to recover the money, that right is incorporeal property, which vests in the Custodian and may be enforced under the amended section 48 rather than under section 9. The appellant’s further contention that sub‑sections 1 and 2 of section 48 do not apply was thus rejected. The next argument raised by the appellant was that, by treating the amount as a deposit, the right to recover it had become barred, and that sub‑section 3 of section 48 could not be invoked because it deals with vested rights, not procedural matters, and could not be applied retrospectively. The Court then turned to the relevant chronology. The authorities’ findings indicated that the deposit was made in January 1946. The appellant’s sister migrated between June and August 1949. Under the law applicable in the relevant area at that time, the sister became an evacuee on the date of her migration, and consequently her property vested in the Custodian on that date. Therefore, her right to recover the amount from the appellant vested in the Custodian sometime between June and August 1949, provided it remained alive under the limitation law, irrespective of the separate question concerning the bar of limitation.
In this matter, the Court observed that when a right to recover a sum persists but the legal remedy to enforce it is barred, the remedy is unavailable even though the right remains. Because the sum in question was characterized as a deposit, the Court explained that the period of limitation would commence at the earliest from the date on which a demand for the return of the money was made. The record showed that there was no evidence of any demand being made by the appellant’s sister before she migrated to Pakistan. Consequently, the limitation period had not yet begun at the time of her migration, provided that Article 60 of the Limitation Act, No 9 of 1908, was applicable. As a result, the Court held that the sister’s right to recover the amount, which had vested in the Custodian upon her becoming an evacuee, was not barred by limitation at that stage.
The Court noted that the first demand for the sum was made by the Assistant Custodian on 10 January 1952, and therefore the limitation clock would start running from that date at the earliest. The appellant later argued that, even if the actionable claim vested in the Custodian, the demand dated 10 January 1952 meant that, under Article 60 of the Limitation Act, the right to recover the amount would become time‑barred in January 1955. The appellant further asserted that no proceeding could be instituted under section 48 after January 1955. The appellant also contended that the amended Act, which came into force on 22 October 1956, would permit sub‑section (3) of section 48 to apply only to cases where the limitation period had not expired before that date.
The Court stated that it was unnecessary to resolve the precise effect of sub‑section (3) of section 48 for the present appeal because the appellant had never before the concerned authorities disputed the possibility of recovery under section 48 even if the sum was treated as a deposit. The appellant’s earlier contentions before those authorities were limited to the argument that recovery was barred because the amount had been given to him as a loan. Accordingly, the appellant could not, for the first time in this Court, rely on the plea that recovery could not be made under section 48 and that sub‑section (3) would not apply when the amount was treated as a deposit. By raising this new contention, the appellant introduced a fresh question concerning the operation of sub‑section (3) of section 48.
Beyond the issue of sub‑section (3), the respondent argued that, had this question been raised before the appropriate authorities, evidence could have been adduced to show that the recovery was not barred. The respondent explained that the case had proceeded on the assumption that Article 60 of the Limitation Act applied, and that proper defenses—such as the conditions under which the deposit was made, whether it was payable on demand, and any acknowledgment of liability by the appellant—could have been raised. These defenses would have generated factual issues that were never investigated. Therefore, the respondent urged that the appellant should not be permitted to introduce the point that recovery would be barred even if the amount were treated as a deposit.
The Court observed that the appellant had never argued before the lower authorities that the recovery would be barred by limitation even if the amount in dispute were characterized as a deposit. Instead, the appellant had consistently maintained that the transaction was a loan and not a deposit, and therefore the question of limitation on a deposit never arose in the proceedings below. The Court therefore found merit in the respondents’ submission that the appellant could not now introduce a fresh contention that the recovery would be barred on the basis of the amount being a deposit. The Court was of the opinion that the respondents’ contentions possessed sufficient force, and consequently it would not entertain the appellant’s attempt to raise the issue of limitation if the amount were treated as a deposit. In the Court’s view, because the appellant’s argument was not raised before the earlier authorities, there was no necessity to examine the precise operation of section 48(3) of the relevant statute, nor to decide whether that provision would apply to cases where the limitation period had already expired under the Limitation Act before 22 October 1956. Accordingly, the Court refused to allow the appellant to argue that the recovery was barred even on the premise that the amount constituted a deposit. As a result, the appeal was dismissed, and the Court ordered that the appellant pay the costs of the proceedings. The appeal was thus dismissed with costs.