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Case Number

Appeal No. 6 of 1954: Misc. Pet. No. 322 of 1953

Advocates

M.P Amin, Advocate General for the appellant.
M.L Maneksha with K.S Cooper for the respondent.

Judges

Mr. M.C Chagla, C.J
Mr. Shah, J.

Acts

s. 13 of Bombay Act II of 1876 as amended by s. 4 of Bombay Act III of 1900.
s. 7 of the Administration of Evacuee Property Act
s. 10(2)(f). Section 10(1)

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Smart Summary

Structured Summary of the Opinion (Chagla, C.J.; Shah J.; Per Curiam)

Factual and Procedural Background

The appeal challenges a judgment of Mr. Justice Tendolkar, which granted relief to a petitioner who sought to restrain the Custodian of Evacuee Property from recovering Rs. 1,60,000 by a summary procedure. The operative facts stated in the opinion are:

Three brothers (the petitioner, Alimahomed and Husein) carried on a business running a cinema called Nishat Talkies.
Alimahomed and Husein were declared evacuees in January 1950; the Custodian declared their right, title and interest in Nishat Talkies as evacuee property.
The business was managed by the petitioner, who was called upon by the Custodian to furnish accounts and information about the business.
The Custodian determined that Rs. 1,60,000 was due in respect of the evacuees' interest and on 10 August 1953 gave notice that he would proceed to recover that sum by attachment and sale of the petitioner's property or by other remedies provided by s. 13 of Bombay Act II of 1876 (as amended by s. 4 of Bombay Act III of 1900).

The petitioner filed a petition in this Court to restrain the threatened summary recovery; Mr. Justice Tendolkar granted relief. The central contest on appeal was the extent of the Custodian's powers to determine and recover debts alleged to be due to evacuees.

Attorneys recorded in the opinion: Appellant — Little and Co.; Respondent — Amarchand and Mangaldas.

Legal Issues Presented

What are the powers of the Custodian of Evacuee Property in respect of a debt which might be due to an evacuee — in particular, whether the Custodian may ascertain the quantum of such a debt and recover it by summary process without resort to ordinary civil courts?
Whether specific statutory provisions (notably s. 7, s. 8, s. 9, s. 10(2)(f), s. 10(2)(i), s. 10(2)(j) and s. 48 of the relevant Act, and the procedure referenced in s. 13 of Bombay Act II of 1876 as amended) confer on the Custodian authority to adjudicate and enforce debts due to evacuees as if they were arrears of land revenue or otherwise by executive summary action.

Arguments of the Parties

Appellant's Arguments (as represented by the Advocate General)

When the right, title and interest of Alimahomed and Husein in Nishat Talkies was declared evacuee property under s. 7, any sum due in respect of that right would also be evacuee property, and under s. 8 the Custodian would have the right to recover such sums.
Because the Custodian could call for returns, accounts and information under s. 10(2)(f), he could ascertain the debt and determine what was due.
Clause (i) of s. 10(2) (power to take action necessary for recovery of any debt due to the evacuee) authorises the Custodian to recover the debt; clause (j) contemplates the Custodian instituting or defending legal proceedings.
Once the Custodian ascertained that Rs. 1,60,000 was due, that sum became due under the provisions of the Act and, relying on s. 48, could be recovered as if it were an arrear of land revenue.

Respondent's Position (petitioner)

The petitioner sought to restrain the Custodian from recovering Rs. 1,60,000 by summary process and thereby threatened the petitioner's property; the petition sought protection against such executive enforcement.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court's reasoning is principally statutory construction and an analysis of the distinction between tangible property and incorporeal rights (choses in action). The analysis proceeds in the following steps:

Interpretation of vesting and "property": The Court observed that s. 7 permits the Custodian to declare property as evacuee property after notice and inquiry. "Property" is defined broadly in the Act to include rights or interests. The Custodian's declaration vested in him the right to recover sums due in respect of the evacuees' right, title and interest in the Nishat Talkies.
Distinction between a right to recover and the debt itself: The Court emphasized a legal distinction between tangible property (which can be taken into possession) and an incorporeal right to recover a debt (a chose in action). What vested in the Custodian was the right to sue or to realise the debt, not the debt itself as an immediately enforceable sum under the Act.
Analysis of s. 10(2)(f): The Court accepted that cl. (f) authorises the Custodian to call for returns, accounts and documents and to require production notwithstanding other disclosure restrictions. However, the Court rejected the contention that cl. (f) empowers the Custodian to adjudicate the quantum of liability and transform a right to obtain accounts into a binding debt payable immediately to the Custodian by executive fiat.
Analysis of s. 10(2)(i) and (j): Clause (i) authorises the Custodian to take action necessary for recovery of any debt due to the evacuee; the Court interpreted this as authorising legal action according to law (i.e., instituting proceedings in civil courts), not summary executive seizure to enforce an unadjudicated debt. Clause (j) further contemplates that the Custodian may institute or defend legal proceedings in civil or revenue courts, indicating that ordinary judicial process remains available and contemplated.
Analysis of s. 48: Section 48 permits sums "due" to the State Government or to the Custodian under the Act to be recovered as if they were arrears of land revenue. The Court held that s. 48 is inapplicable unless a sum is already due "under the provisions of this Act." The mere vesting of a right to recover a debt does not render the quantum of that debt a sum due under the Act; a court must determine what, if anything, is legally due.
Comparison with s. 9 (tangible property): The Court noted that the Legislature expressly conferred drastic, summary powers on the Custodian to take possession of tangible immovable evacuee property (s. 9 and s. 8(4)), but provided no analogous summary power for recovery of debts. The absence of such a provision pointed to an intention that debts be recovered through ordinary legal proceedings.
Conclusion from statutory scheme: Given the textual differences and the legislative scheme, the Court concluded there is nothing in the Act authorising the Custodian to determine the liability of a person to the estate and to enforce that liability by summary executive action without resort to the courts. The Custodian's powers to call for accounts do not include power to convert a right to an account into a binding debt enforceable as if it were an arrear of land revenue.
Judicial concurrence: Both Chagla, C.J. and Shah J. reached substantially the same conclusions. The Court agreed with the learned Judge below (Mr. Justice Tendolkar) who granted relief to the petitioner.

Holding and Implications

HOLDING: The appeal is dismissed. The rule in Special Civil Application No. 1946 of 1954 is made absolute with costs. In practical terms, the Custodian may not, by his own determination, convert a mere right to obtain accounts or a chose in action into a sum of money "due under the provisions of the Act" and then recover that sum by summary executive process (including as if it were an arrear of land revenue). The Custodian's right is to pursue recovery by legal action in accordance with ordinary law.

Direct implications for the parties:

The petitioner's application to restrain the Custodian from recovering Rs. 1,60,000 by summary procedure succeeds; the Custodian cannot compel payment of that amount without first obtaining the determination of a court of law as to what, if any, sum is due.
The Custodian retains the right to call for accounts and to institute or defend legal proceedings (s. 10(2)(f), (i), (j)), but must enforce debts through judicial process rather than by unilateral executive enforcement under s. 48 unless and until a sum is properly adjudicated to be due under the Act.

Broader legal significance (as stated in the opinion):

The opinion emphasises the legal distinction between possession/possession-reducible property and choses in action (rights to sue), and construes the Act consistently with that distinction: summary executive powers apply to tangible evacuee property but not to judicial determination and enforcement of debts.

Additional notes from the opinion: The court recorded counsel and attorneys (Appellant: Little and Co.; Respondent: Amarchand and Mangaldas). The formal disposition in the published text is: "Appeal dismissed." The per curiam direction was: "Rule absolute with costs in Special Civil Application No. 1946 of 1954."

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S. Benjamin, The Deputy Custodian Of Evacuee Property, Bombay , (Original ) v. Ebrahim Aboobaker , (Original Petitioner).

Chagla, C.J:—

This is an appeal against the judgment of Mr. Justice Tendolkar by which he gave relief to the petitioner who sought to restrain the Custodian of Evacuee Property from recovering from him a sum of Rs. 1,60,000 by summary procedure. The facts briefly are that the petitioner, one Alimahomed and one Husein are brothers and Alimahomed and Husein were declared evacuees in January 1950. These three brothers were carrying on business of running a cinema theatre called Nishat Talkies and the Custodian declared the right, title and interest of Husein and Alimahomed in these Talkies as evacuee property. This business was being managed by the petitioner and therefore the Custodian called upon him to furnish accounts with regard to this business. Ultimately the Custodian determined that in respect of the evacuees' right, title and interest in the Nishat Talkies a sum of Rs. 1,60,000 was due and he called upon the petitioner to pay this amount and he gave him notice on August 10, 1953 that if he did not pay this amount he will proceed to obtain the payment of the sum by attachment and sale of property of the petitioner, moveable or immoveable, or by other remedies provided by s. 13 of Bombay Act II of 1876 as amended by s. 4 of Bombay Act III of 1900. It is this threat to his property that the petitioner sought to resist by filing a petition in this Court on which Mr. Justice Tendolkar made the order, and the question that arises for our determination is, what are the powers of the Custodian in respect of a debt which might be due to the evacuee.

Now, turning to the scheme of the Act, s. 7 gives the power to the Custodian to declare any property as evacuee property. This power can only be exercised after he has given notice to any person interested in the property and also after holding an inquiry. Any property can be declared to be evacuee property, and “property” is very widely defined in the Act and it is defined to mean property of any kind and includes any right or interest in such property. The Advocate General is right when he contends that when the right, title and interest of Alimahomed and Husein in the Nishat Talkies was declared to be evacuee property, any sum due in respect of this right, title and interest would also be evacuee property. The result of that would be that under s. 8 the Custodian would have vested in him the right to recover any sum due to the evacuee in respect of this right, title and interest in the Nishat Talkies. But what the Advocate General has to satisfy us about is that in respect of this debt the statute has conferred the power upon the Custodian to recover that debt, first by ascertaining the debt himself and then proceeding to recover it without resort to the ordinary Courts of the land. Now, there is a clear distinction between “property” and “right to property,” and under s. 8 not only property may vest in the Custodian but also right to property may vest in him. Jurisprudence recognises that there is a difference between property which is in possession or which may be reduced to possession and property which can only be recovered through action. The latter class of property is the right to recover tangible property and is better known as a chose in action or an actionable claim. Therefore, in this case the position might be accepted that the Custodian had the right to recover any sum due to the evacuee in respect of his right, title and interest in the Nishat Talkies. That was a right to sue or a right to realise the debt by an action. But the right to recover the debt is not the same thing as the property or the debt itself. What vested in the Custodian was not any specific property, not any tangible property, but merely a right to recover a debt. The whole of the Advocate General's contention amounts to this that if the right to recover a debt is vested in the Custodian, he has also the right to determine what the debt is and then to recover that debt by summary process without resorting to the ordinary Courts of the land. It may be that this particular Act, which is a very special Act, may confer such drastic power upon the Custodian, but we have to be satisfied that there is such a power before we can permit the Custodian to recover a debt otherwise than by the ordinary procedure known to law.

Now, the Advocate General first relies upon s. 10(2)(f). Section 10(1) deals with the powers and duties of the Custodian generally, and these powers are to be exercised for the purpose of securing, administering, preserving and managing evacuee property, and sub-s. (2) of s. 10 deals with a certain particular powers conferred upon the Custodian and cl. (f) confers upon the Custodian the power to require any person, notwithstanding anything to the contrary contained in any other law for the time being in force relating to the disclosure of any information by a public servant or any other person, to furnish such returns, accounts or other information in relation to any property and to produce such documents in his possession as the Custodian considers necessary for the discharge of his duties under this section. Therefore under this sub-section the Custodian had the right to call upon the petitioner to furnish him returns, accounts and all information with regard to the Nishat Talkies. But it is difficult to understand where the Advocate General finds the power in this sub-section conferred upon the Custodian on receiving the information and accounts to adjudicate upon what the debt due by the evacuee is. Then the Advocate General relies on cl. (i) of s. 10(2) which confers upon the Custodian the power to take such action as may be necessary for the recovery of any debt due to the evacuee. Obviously, the action contemplated by this clause is any legal action, and under the ordinary law a debt can only be recovered by filing a suit in a civil Court, proving the debt and getting a decree in respect of that debt. Clause (j) makes it clear that the Custodian is not above the ordinary Courts of the land because it contemplates the Custodian instituting, defending or continuing any legal proceeding in any civil or revenue Court, on behalf of the evacuee. Therefore, in our opinion, there is nothing in s. 10 which suggests that the Custodian has been given the power to recover a debt by a summary process without having resort to the civil Courts of the land. Then reliance is placed on s. 48 which provides that any sum dug to the State Government or to the Custodian under the provisions of this Act may be recovered as if it were an arrear of land revenue. Now, before the Advocate General can rely on this section he must satisfy us that any sum is due to the Custodian under the provisions of this Act, and the Advocate General says that after the Custodian ascertained that a sum of Rs. 1,60,000 was due, that was the sum which became due under the provisions of the Act and therefore s. 48 applied and the Custodian could recover that sum as if it were arrears of land revenue. In our opinion, the sum of Rs. 1,60,000 was not due to the Custodian under any provisions of the Act. The only right that the Custodian had under the provisions of the Act was the right to recover the amount. That right was vested in him, but we cannot equate the right to recover Rs. 1,60,000 with the sum of Rs. 1,60,000 itself. We cannot say that because the Custodian has the right to recover Rs. 1,60,000 therefore Rs. 1,60,000 is due to him by the petitioner. It would only be a civil Court of law which could determine what is due to the Custodian by the petitioner, and till that determination is arrived at it could not be said that any amount is due in law to the Custodian.

It is rather instructive in this connection to look at s. 9. That section deals with the right of the Custodian to take possession of tangible evacuee property and when the Legislature was dealing with tangible evacuee property it has given drastic power to the Custodian to take possession of such property by taking all necessary steps after giving due notice. But when one tries to find a similar provision with regard to the recovery of a debt due to the evacuee, one looks in vain. Therefore it is clear that whereas the Legislature wanted the Custodian to have summary powers for the recovery of tangible property and it was not incumbent upon him to go to a Court of law to recover possession, in the case of a debt due no such power was conferred upon the Custodian, with the result that he could only recover the debt under the ordinary law which is by going to a civil Court, establishing the debt and getting the Court to pass a decree in his favour. Till that is done the Custodian has no right to compel the petitioner to pay the sum of Rs. 1,60,000 or any other sum as the debt due to the evacuee.

In our opinion the learned Judge was right in the conclusion he came to. The result is that the appeal falls and is dismissed with costs.

Shah J.:— The Assistant Custodian of Evacuee Property having under s. 7 of the Administration of Evacuee Property Act notified as evacuee property the right, title and interest of Husein Aboobakar and Alimahomed Aboobakar in the business concern known as Nishat Talkies, it may safely be held that by that declaration not only the property of the Nishat Talkies but all rights which Husein Aboobakar and Alimahomed Aboobakar had in that business were declared evacuee property. What was however vested in the Custodian by the notification, was the right inter alia to enforce liability of the respondent to account for the partnership assets and dealings. A liability to account postulates liability to pay the amount which may be ascertained to be due. If in taking accounts of that business it is ultimately found that any amount of money is due to the two evacuees the right to recover that amount may also by reason of the declaration be regarded as evacuee property. The right to enforce liability to account for the partnership dealings and assets having vested in the Custodian the right to recover the amount which may be determined to be due may also be regarded as vested in the Custodian by operation of s. 8 of the Act. Under cl. (f) of s. 10(2) it is open to the Custodian of Evacuee Property to call upon any person to furnish, returns, accounts or other information in relation to any property which is vested in the Custodian and to produce such documents in his possession as the Custodian considers necessary for the discharge of his duties under the Act. That provision enables the Custodian to call upon any person who may be in possession of any documents which relate to evacuee property or the management thereof to produce the same before the Custodian. But there is nothing in cl. (f) of s. 10(2) which authorises the Custodian to take an account of the liability of any person who may have documentary evidence or information relating to evacuee property in his possession. The Advocate General argued that the liability to furnish accounts when demanded by the Custodian it not only imported liability to render accounts, but the Custodian was authorised to adjudge or determine the liability of any person who appeared to him to be liable to the estate vested in him and the extent thereof. In my judgment there is nothing in cl. (f) which justifies us in Holding that it was intended by the Legislature to impose upon any person under cl. (f) a liability for an amount determined to be due by the Custodian on scrutiny of the accounts in respect of any property in respect of which such person is in possession of any documentary evidence or information. Undoubtedly the property of an evacuee having vested in the Custodian he is entitled to call upon a person who has information or documentary evidence with regard to that property to disclose all the information that he has and to produce documentary evidence. But the right to call upon a person to furnish information, returns or accounts does not carry with it the right by the Custodian's own adjudication to determine the liability and the extent of the liability of any person in respect of any property which is vested in the Custodian. The Legislature has made a clear distinction between the rights of a Custodian in respect of tangible immoveable evacuee property and incorporeal right which are vested in the Custodian. When a Custodian makes a declaration that any property is evacuee property, whatever the nature of the property, it vests in him. If the property is tangible immoveable property the Custodian may under s. 8(4) read with s. 9 take possession of the property, without recourse to a Court of law, but there is no power conferred upon the Custodian authorising him to adjudge liability to a debt and to recover the same. It was urged on behalf of the Appellant that when the Custodian determines under s. 7 that a particular item of property is evacuee property and that property vests in him he is also entitled to determine the extent of the evacuee property and when the evacuee property is a right to a debt, which may be ascertained on taking accounts, the Custodian is authorised in exercise of the power under s. 10(2)(f) to take an account and to determine the extent of liability of any person who appears to him to be liable to the estate, and the Custodian may recover the amount so determined without recourse to a Court of law. It is difficult to see what there is in the Act which enables the Custodian by his own determination to convert a mere right to obtain an account into a conclusive liability for an ascertained debt and to enforce that liability determined by him by executive action. It was urged by the Advocate General that in cl. (i) of s. 10(2) the right of a Custodian to determine the quantum or extent of liability of a person liable to the estate vested in him was implicit. It was submitted that a right to a debt being property the authority to determine the extent of that debt is conferred by s. 7 of the Act, and the right to recover that debt is given by cl. (i) of s. 10(2) and the procedure for enforcement of that debt is provided in s. 48 of the Act. The argument is however founded on the assumption that a right to obtain an account is a debt due to the Custodian. The Legislature not having conferred upon the Custodian power by his own determination to convert a right to obtain an account into a debt due to the Custodian, it may not strictly be necessary to consider whether the Custodian can enforce liability for every debt due in the manner provided by s. 48 of the Act. It must however be observed that a right to recover a debt is a chose in action, and the Custodian must enforce it in the manner provided by law. Clause (i) undoubtedly authorises the Custodian to take such action as may be necessary for recovery of any debt due to the evacuee, but the action which is contemplated to be taken under cl. (i) must of necessity be action which is according to law. It cannot be suggested for a moment that it is open to the Custodian to rush into the house of a debtor of the evacuee and take possession of cash lying in the house of the debtor merely because the property of the evacuee has vested in the Custodian. Section 48 of the Act enables the Custodian to recover any sum due under the provisions of the Act as if it were arrears of land revenue, but before that right can be exercised there must be a sum due under the provisions of the Act. It is sufficient for deciding this case to state that there is nothing in the Act which converts a mere right vested in the Custodian to enforce liability for an amount which is undertermined and which cannot be determined without recourse to a Court of law into a sum of money due under the provisions of the Act. I agree therefore with the order proposed by My Lord the Chief Justice.

Per Curiam. Rule absolute with costs in Special Civil Application No. 1946 of 1954.

Rule made absolute.

Attorneys for the Appellant:— Little and Co.

Attorneys for the Respondent: Amarchand and Mangaldas

Appeal dismissed.

P.M.P

S. Benjamin, The Dep... v. Ebrahim Aboobaker , ...