Citation Codes

Equivalent Citations

citation codes

Judges

Mr. Vedpal Tyagi

Acts

Section 10(2)(m) by Section 4 of the Administration of Evacuee Property (Amendment) Act (91 of 1956) and the consequent deletion of Rule 22 of the Administration of Evacuee Property (Central) Rules, 1950
provisions of Section 10(1) read with Section 10(2)(n) of the Administration of Evacuee Property Act, 1950 (hereinafter called the Act).
Rule 22 of the Administration of Evacuee Property (Central) Rules, 1950.
provisions of Section 10(2)(n) read with Section 10(1) of 1950 Act
Section 10(2)(n) read with Section 10(1) of the 1959 Act
Amending Act No. 91 of 1956, Section 10(2)(m)
Section 30(1) read with Section 10(2)(m)
Amending Act, whereby Section 10(2)(m)
provisions of Section 10(2)(m)
Section 12 of the 1954 Act
Rehabilitation) Act, 1954,
India Part II, Section 3
Section 12 of 1954 Act
Amendment Act of 1956.
Rule 22 of the Rules

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Smart Summary

Structured Summary of the Opinion — Pannalal v. Union of India / Custodian

Factual and Procedural Background

Petitioner Pannalal had advanced a loan to one Ashraf Ali, who after partition migrated to Pakistan leaving three houses in Ajmer. Petitioner obtained a civil decree on 22 August 1948 from the Sub-Judge, First Class, Ajmer (Civil Suit No. 436 of 1948) for Rs. 4,000 with 3% interest. On 12 September 1949 the petitioner registered his third-party claim with the Assistant Custodian of the erstwhile State of Ajmer; registration is evidenced by documents produced as Annexures (Ex.2 and Ex.3 dated 24 July 1951 and 21 September 1951 respectively).

The Assistant Custodian did not take steps to satisfy the decretal debt. The evacuee’s properties were ultimately sold (for Rs. 46,100/-) and the sale proceeds are said to have been treated as part of a compensation pool, but the decretal debt was not discharged. The petitioner made repeated representations to the relevant authorities over many years; departmental correspondence acknowledged that the matter was “receiving attention,” but the claim remained unpaid. The Assistant Regional Settlement Commissioner informed the petitioner that the sale proceeds constituted part of the compensation pool vested in the Central Government and that the Custodian had no jurisdiction to make payment out of that pool (Annexure 14).

Having exhausted administrative recourse over a long period (about 21 years), the petitioner invoked the extraordinary jurisdiction of this Court under Article 226 of the Constitution, seeking a writ, order or direction to compel payment of Rs. 7,000 (the decretal amount claimed in the petition) with 3% future interest. The Union of India, the Regional Settlement Commissioner, Jaipur and the Custodian of Evacuee Property, Jaipur were impleaded as respondents; none filed a substantive reply or appeared at critical stages. On being directed to ascertain whether funds existed with the Custodian to satisfy the decree, the Union’s representative failed to supply that information even after adjournments.

Legal Issues Presented

Whether the Custodian is under a statutory obligation to pay a decretal debt of a decree-holder when the third-party claim has been duly registered with the Custodian.
What effect (if any) the amendment of Section 10(2)(m) of the Administration of Evacuee Property Act, 1950 (and the consequential deletion of Rule 22 of the Central Rules) has on third-party claims registered prior to that amendment.
Whether the Custodian retains power to pay a registered third-party claim from funds in his possession where evacuee properties have been transferred to, and vested in, the Central Government under the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (and notification under Section 12 of that Act).

Arguments of the Parties

Petitioner's Arguments

The petitioner asserted that he had a valid decree (1948) against the evacuee and had duly registered his third-party claim with the Custodian in 1949/1951, but the Custodian failed to act to satisfy that decree despite the claim being on record.
The petitioner maintained that the Assistant Settlement Commissioner (acting as Custodian) was under statutory obligation to discharge liabilities of an evacuee under Section 10(1) read with Section 10(2)(n) of the Administration of Evacuee Property Act, 1950.
After protracted attempts to obtain payment administratively, the petitioner sought judicial relief under Article 226 to compel payment of the decretal debt (claimed as Rs. 7,000 with 3% future interest) out of any funds still held by the Custodian.

Respondents' Position (as reflected in record)

The Assistant Regional Settlement Commissioner (in correspondence placed on record) took the position that the sale proceeds of the evacuee’s immovable properties were transferred to a compensation pool which vested in the Central Government under the 1954 Act, and that the Custodian had no jurisdiction to make payment out of that compensation pool to satisfy the petitioner’s claim.
No substantive written reply was filed by the respondents before this Court and the Union’s representative failed to produce information about whether funds were held by the Custodian which could satisfy the decree.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Raja Bhanu Pratap Singh v. Assistant Custodian, E.P., Bahraich (Supreme Court)	The power to administer under Section 10(2) includes not only management/collection of assets but also the power to discharge obligations of the evacuee; i.e., the Custodian may pay debts which, in his opinion, are binding on the evacuee.	The Court relied on this authority to conclude that the Custodian retained the statutory power to determine and pay valid debts of an evacuee (under Section 10(1) read with Section 10(2)(n)), and that registration of a claim required the Custodian to investigate entitlement rather than treat a civil decree as automatically decisive.
N. S. Gujral v. Custodian of Evacuee Property and Anr. (Supreme Court)	After evacuee properties vested in the Central Government under Section 12 of the 1954 Act, the Custodian could still pass an order under Section 10(2)(n) read with Section 10(1) to pay a third-party claim out of moneys lying with him on the date of vesting.	The Court applied this principle to hold that if funds remained in the Custodian’s possession when the properties vested, the Custodian could pay a genuine registered claim out of those funds, subject to satisfaction as to the genuineness of the claim.
Vadapalli Sattarah v. Custodian, Evacuee Property, Govt. of A.P., Hyderabad (Andhra Pradesh High Court)	The amendment of Section 10(2)(m) by the Administration of Evacuee Property (Amendment) Act, 1956 (and the consequent deletion of Rule 22) is not retrospective; a third-party claim registered before the amendment is not impaired by the amendment.	The Court relied upon this reasoning to conclude that the petitioner’s claim—registered in 1951—was not affected by the 1956 Amendment Act and that the petitioner remained entitled to payment from any funds still lying with the Custodian.

Court's Reasoning and Analysis

The Court proceeded by (i) examining the status of the petitioner’s registered claim and (ii) analysing the statutory framework and precedents bearing on whether the Custodian could be compelled to pay the decretal debt from funds under his control.

First, the Court observed that the petitioner had registered his third-party claim with the Custodian and that, after registration, the Custodian did not pass any order accepting or rejecting the claim. The Court treated the Custodian’s failure to reject the claim as conduct indicative of acceptance, coupled with a failure to discharge the corresponding obligation to the decree-holder.

Second, the Court addressed statutory provisions and amendments. It noted that Section 10(2)(m) and Rule 22 previously provided a procedural and substantive basis for the Custodian to discharge evacuee debts; although Section 10(2)(m) was amended by the Administration of Evacuee Property (Amendment) Act, 1956 and Rule 22 was deleted, the Court relied on the Supreme Court’s interpretation (in Raja Bhanu Pratap Singh) that the Custodian’s power to pay debts is preserved under Section 10(1) read with Section 10(2)(n). Thus, the mere amendment and deletion did not destroy the Custodian’s underlying power to satisfy debts.

Third, the Court considered the effect of the Displaced Persons (Compensation and Rehabilitation) Act, 1954 and consequent notification (S.R.O. 816 dated 6 April 1955) under which evacuee immovable properties were transferred to and vested in the Central Government, forming a compensation pool. The respondents relied upon this transfer to deny jurisdiction. The Court analysed the Supreme Court’s decision in N. S. Gujral, which held that the Custodian could, where moneys were lying with him on the date of vesting, pass orders to pay third-party claims under Section 10(2)(n) read with Section 10(1). Therefore the vesting of immovable properties in the Central Government did not automatically extinguish a previously registered claim where funds remained with the Custodian.

Fourth, the Court relied on Vadapalli Sattarah to conclude that the 1956 Amendment Act and deletion of Rule 22 were not retrospective; a claim registered prior to that amendment (as in the petitioner’s case in 1951) remained unimpaired and the decree-holder retained the right to payment from funds lying with the Custodian.

Putting these elements together, the Court reasoned that (a) a civil court decree is not by itself decisive of entitlement to payment from Custodian-held funds — the Custodian must determine the genuineness of the claim; (b) where a claim was registered and not rejected, the Custodian’s conduct indicated acceptance and obligation to act; (c) the statutory scheme and precedents preserve the Custodian’s power to satisfy genuine registered claims from funds then or thereafter in his possession even though immovable properties may have been vested in the Central Government; and (d) the petitioner’s registered claim of 1951 was therefore not defeated by subsequent statutory amendments or by the transfer of immovable properties to the Central Government.

The Court also noted procedural deficiencies: the respondents did not appear or file substantive replies and did not supply information about whether funds were available to satisfy the decree despite specific directions.

Holding and Implications

Holding: The writ petition is ALLOWED. The Court directed respondent No. 3 (the Custodian) to pay the petitioner’s decretal debt out of the funds, if any, still held by him as Custodian. The petitioner is awarded his costs against respondent No. 3.

Implications:

Direct effect on the parties: the Custodian (respondent No. 3) is ordered to satisfy the petitioner’s decretal claim from any funds remaining in the Custodian’s possession. The petitioner also recovers costs from respondent No. 3.
Limitation on relief against Central Government compensation pool: the Court made clear that no direction could be issued to require payment from the compensation pool vested in the Central Government; the relief permitted is limited to funds actually held by the Custodian.
No broader novel precedent was announced by this decision; the Court’s conclusion is grounded on existing statutory interpretation and prior authorities (as discussed in the opinion) that preserve the Custodian’s power to satisfy genuine registered third-party claims from funds in his possession.

This summary is limited to and derived exclusively from the content of the provided opinion and does not add or infer facts beyond that text.

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Pannalal v. Union Of India (Uoi) And Ors.

1. This writ petition of Pannalal arises out of the following circumstances:

2. Petitioner Pannalal had advanced a loan to one Ashraf Ali who, after the partition of the country, migrated to Pakistan leaving behind him three houses properties in the town of Ajmer Petitioner had obtained a decree on 22nd August, 1948, of Rs. 4,000/- with 3 percent interest against Ashraf Ali from the court of the Sub-Judge, First Class, Ajmer, in Civil Suit No. 436 of 1948. On 12th of September, 1949, the petitioner registered this third party claim with the Assistant Custodian of the erstwhile State of Ajmer for the payment of the decretal amount and the same was registered vide the letters of the Assistant Custodian (Anneuxre 2) and (Annexure 3) dated 24th of July. 1951 and 21st of September, 1951, respectively. Thereafter it so appears that the Assistant Custodian did not take any proceedings to pay off the claim of the petitioner as registered with him under Rule 22 of the Administration of Evacuee Property (Central) Rules, 1950. It is alleged that the properties of the evacuee which vested in the Custodian were ultimately sold for Rs. 46, 100/-, but the authorities did not care to discharge the decretal debt which was due to the petitioner from the evacuee. Petitioner made various representations to the authorities concerned to expedite the payment of the decretal debt, but to his dismay those representations did not bear any fruit. A reply was received from Shri T.N. Mathur Accounts Officer of the Regional Settlement Commissioner Rajasthan, Jaipur vide his letter No. RSCR/AO(C)/Actis /Third party claim/68/10398 wherein it was mentioned that the claim of the petitioner was receiving attention of the department. This letter had been placed on the record as Annexure 6. Thereafter, petitioner's counsel wrote a letter to the Regional Settlement Commissioner, Jaipur, requesting him to expedite the matter and to that letter a reply was received once again from the same officer vide letter dated 8th November, 1908 (Annexure 8) expressing that the matter was receiving his attention. But the grievance of the petitioner is that no action was taken by the Assistant Regional Settlement Commissioner who was functioning as a Custodian also. When upto 1970 the petitioner did not receive any satisfactory reply from the office of the Assistant Settlement Commissioner, Rajasthan Region, Jaipur, who had promised to look into the matter, a letter was again addressed to Shri N.B. Gorwaney who was then Assistant Settlement Commissioner, Rajasthan Region, reminding him of the promise made by him. In reply to that letter Shri Gorwaney wrote back to the petitioner that the aforesaid three properties belonging to the evacuee have already been disposed of and the sale proceeds thereof have constituted part of the compensation pool which vests in the Central Government and that the Custodian had no jurisdiction to make payment out of the compensation pool to satisfy the petitioner's claim.

3. It is averred by the petitioner that under the law the Assistant Settlement Commissioner, Jaipur, was also exercising the powers of the Custodian and as such he was under an obligation to discharge the liabilities of an evacuee under the provisions of Section 10(1) read with Section 10(2)(n) of the Administration of Evacuee Property Act, 1950 (hereinafter called the Act). Having failed to get his money from the Custodian, after trying for a long period of 21 years, the petitioner was compelled to knock the doors of this Court by invoking the extraordinary jurisdiction under Article 226 of the Constitution and has prayed that by issuing an appropriate writ, order or direction, the respondents may be asked to pay the amount of Rs. 7,000/- to the petitioner under the decree passed by the Sub-Judge, Ajmer, with 3% future interest thereon.

4. The petitioner has impleaded the Union of India the Regional Settlement Commissioner, Jaipur and the Custodian of Evacuee Property, Jaipur as the respondents, but none of the respondents cared to appear before this Court and file the reply to the petition.

5. On 8th of August, 1972, when the case came up for hearing before this Court, Dr. S.K. Tewari, who represents the Union of India, was directed to let this Court know whether the Custodian has any funds with him out of which the decree of the petitioner could be satisfied. The learned Deputy Government Advocate, even after three adjournments, could not supply any information to this Court.

6. The question that arises for the determination of this Court is whether the Custodian is under a statutory obligation to pay the decretal debt of the petitioner, especially when the third party claim of the petitioner was duly registered with the Custodian with the copy of the Civil Court decree obtained by him in the year 1949. Ex-2 and Ex-3 go to show that the Custodian had registered the claim of the petitioner, but thereafter he did not pass any order whether the claim was a valid claim or not, nor did he reject the petitioner's claim. Under Section 10(2)(m) of the Act read with Rule 22 of the Rules, before the section was amended and the rule was deleted, it is clear that the Custodian had a power to discharge the debt of the evacuee if such a debt was registered with him and was found to be genuine. By an Amending Act No. 91 of 1956, Section 10(2)(m) was amended by the Legislature and consequently Rule 22 was deleted, but even thereafter the position of a third party claim was not in any manner affected.

7. The vires of the Amending Act, whereby Section 10(2)(m) was amended, was challenged before the Supreme Court, but the Supreme Court held that the power of the Custodian to pay the evacuee's debt is not affected because of the amendment of Clause (m) which specifically authorised the Custodian to pay debts of the evacuee and the consequentially deletion of Rule 22 of the Rules framed under the Act by which a machinery was provided for exercising that power as this power still vests in the Custodian by virtue of the provision of Section 10(2)(n) read with Section 10(1) of the Act. (See Raja Bhanu Pratap Singh v. Assistant Custodian, E.P, Bahraich., E.P. Bahraich . Their Lordships of the Supreme Court in this connection observed as follows:

The power to administer under Section 10(2) is not merely a power to manage on behalf of the evacuee so as to authorise the Custodian merely to recover and collect the assets of the evacuee, but to discharge his obligation as well Having regard to he diverse clauses in Sub-section (2), the power to administer for purposes mentioned, includes the power to pay such debts which in the opinion of the custodian are binding upon the evacuee.

8. However, the Court was of opinion that the decree of a civil court was not decisive of the question whether a person making a claim was entitled to the money claimed by him. It was for the Custodian to determine whether the decree holder was entitled to get that money or not. In view of these findings of the Court, it was necessary for the Custodian when the claim was laid before him to find out whether the decree passed against an evacuee did entitle the decree-holder to receive the decretal amount from the Custodian under Section 30(1) read with Section 10(2)(m) and (n). In the present case, the Custodian, after registering the petitioner's claim, did not pass order either way which shows that the Custodian by his conduct, because he did not reject the claim, had accepted the claim of the petitioner, but he did not take care to discharge the obligations which devolved on him by virtue of being a Custodian of the property of an evacuee against whom a decree was obtained by the petitioner.

9. In 1954 the Displaced Persons (Compensation and Rehabilitation) Act, 1954, came into force and by virtue of the order issued by the Ministry of Rehabilitation being S.R.O. 816 dated 6th of April, 1955, published in the Gazette of India Part II, Section 3 dated 16th April, 1955 all the properties declared to i. e. evacuee properties were transferred to the Government of India and thereafter vested in the Central Government, The Assistant Regional Settlement Commissioner, Jaipur took shelter under this transfer of evacuee properties to the Central Government and finally wrote back to the petitioner (vide) Annexure 14) that the sale proceeds of the evacuees immovable properties form part of the compensation pool which under the provisions of the 1954 act vested in the Central Government and, therefore, the Custodian had no jurisdiction to make payment out of the compensation pool to satisfy the petitioner's claim.

10. In N.S. Gujral v. Custodian of Evacuee Property and Anr. this question whether after the evacuee properties got vested in the Central Government by virtue of notification under Section 12 of the 1954 Act any power was still left with the Custodian to discharge the claim of the third party registered with the Custodian. The Supreme Court was of opinion that the Custodian can pass an older under Section 10(2)(n) read with Section 10(1) of the 1959 Act to pay the third party claim out of the moneys lying with him on the date the properties vested in the Central Government under the notification under Section 12 of the 1954 Act. In view of the aforesaid finding of the Supreme Court, though it was recorded in different context, it can safely be held that if the Custodian has in his possession any amount, then by virtue of the provisions of Section 10(2)(n) read with Section 10(1) of 1950 Act he can pay the claim of the petitioner out of that fund provided he is satisfied that the claim of the petitioner is genuine.

11. The provisions of Section 10(2)(m) which specifically empowered the Custodian to discharge the debts of an evacuee have now been amended and consequently Rule 22 which laid down the procedure for discharging the debts has been deleted, but this amendment in a statute cannot affect the claim of the petitioner as the amendment is not retrospective and would not in any manner affect the claim that had been registered with the Custodian as back as in the year 1951. Andhra Pradesh High Court in Vadapalli Sattarah v. Custodian, Evacuee Property, Govt. of A.P; Hyderabad (3) held that the amendment of Section 10(2)(m) by Section 4 of the Administration of Evacuee Property (Amendment) Act (91 of 1956) and the consequent deletion of Rule 22 of the Administration of Evacuee Property (Central) Rules, 1950 is not retrospective in operation Hence where a third party claim for a decretal debt against an evacuee is registered with the custodian prior to the coming into force of the Amendment Act, the decree-holder's right to get the payment from the funds still lying with the Custodian is not in any manner impaired by the Amendment Act of 1956. The petitioner is, therefore, entitled to have his claim satisfied out of the funds, if any, lying with the Custodian even after the immovable properties of the evacuees were transferred to the Central Government under the provisions of the 1954 act read with the notification issued thereunder by the Government of India.

12. It is true that no direction to pay off the debts of the petitioner can be issued to the Government of India from the compensation pool that vests in the Central Government, but as observed above the claim of the petitioner is not in any manner affected by enacting the 1954 Act and thereby transferring the immovable properties of the evacuees to the Central Government by issuing notification under Section 12 of the 1954 Act. The petitioner is still entitled to get payment from the funds which are still lying with the Custodian as I find that only the immovable properties were transferred to the Central Government under notification issued under Section 12 of 1954 Act to constitute the compensation pool. In these circumstances, the petitioner is entitled to the relief sought by him.

13. The writ petition is, therefore, allowed, and a direction be issued to respondent No. 3 to pay the decretal debt of the petitioner out of the funds, if any, still held by him as a Custodian. The petitioner shall get his costs from respondent No. 3.

Pannalal v. Union Of India (Uoi) And Ors.

Structured Summary of the Opinion — Pannalal v. Union of India / Custodian

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Respondents' Position (as reflected in record)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Pannalal v. Union Of India (Uoi) And Ors.

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