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Rai Bahadur Kanwar R... v. Pramod C. Bhatt, Cus...
Factual and Procedural Background
Messrs. Abdul Karim and Brothers, having migrated to Pakistan, were declared evacuees under the Administration of Evacuee Property Act, 1950. Their properties—including three mills with bungalows and chawls at Ambernath (Thana District) and the Bobbin Factory at Tardeo (Bombay)—were vested in the Custodian for the State of Bombay on 12 September 1951.
On 30 August 1952 the Custodian (respondent) executed a composite agreement (Exhibit A) with the appellants, displaced persons. The instrument:
- Leased the mills and factory to the appellants for five years.
- Sold specified movables (raw materials, finished goods, vehicles, etc.) to the appellants.
- Contained a conditional agreement to sell the immovable properties to the appellants in future.
- Included an arbitration clause for resolving disputes.
The appellants took possession on 31 August 1952. Alleging repeated breaches of lease terms, the Custodian issued notice (Exhibit C) on 12 February 1954 proposing to cancel the lease and to evict the appellants, while also issuing directions—purportedly under Section 10—to protect the movables. The appellants challenged the notice before the Bombay High Court by a writ petition under Article 226 of the Constitution. A single judge (Tendolkar, J.) allowed the petition, holding that:
- Section 12 empowered cancellation only of leases granted by the evacuee, not by the Custodian.
- Section 10 directions could apply only to evacuee property, and the movables had already been sold to the appellants.
The Custodian’s appeal succeeded in part before a Division Bench (Chagla, C.J. and Dixit, J.) on 13 April 1954, which held that Section 12 covered all leases of evacuee property irrespective of lessor, but affirmed the ruling regarding movables. The appellants then obtained a certificate under Article 133(1)(b) and appealed to the Supreme Court.
Legal Issues Presented
- Does Section 12 of the Administration of Evacuee Property Act, 1950 empower a Custodian to cancel a lease granted by himself (and not merely by the evacuee)?
- Are the Custodian’s ancillary directions concerning movables—purportedly issued under Section 10—within his jurisdiction?
Arguments of the Parties
Appellants’ Arguments
- Section 12 authorises cancellation only of leases executed by the evacuee; therefore, Exhibit C was ultra vires.
- Section 10 directions are confined to evacuee property; the movables had been sold to the appellants and were no longer evacuee property.
- Even if Section 12 is applicable, its non-obstante clause overrides only statutory bars, not contractual obligations; hence the Custodian cannot rescind his own contractual commitments.
- The notice improperly attempted to cancel the agreement to sell the mills and factory, which was distinct from the lease.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Aswini Kumar Ghosh v. Arabinda Bose (1953) SCR 1 | Interpretation of a non obstante clause and its inability to abridge the operative portion of a statute. | Cited to show that the saving clause (“notwithstanding anything in any other law…”) does not limit the Custodian’s express power to cancel or vary leases. |
| Dominion of India v. Shrinbai A. Irani (1955) 1 SCR 206 | Scope and effect of non obstante clauses. | Relied upon for the same proposition: the non obstante clause in Section 12 was inserted ex abundanti cautela and cannot cut down the Custodian’s substantive powers. |
Court's Reasoning and Analysis
The Supreme Court noted that after the High Court’s judgment, Parliament enacted Section 5 of the Administration of Evacuee Property (Amendment) Act, 1954. By retrospectively inserting an Explanation into Section 12, the legislature declared that “lease” includes leases granted by the Custodian and “agreement” includes agreements entered into by him. Consequently, the Court held that the Custodian always possessed authority to cancel such leases.
Addressing the appellants’ new contention that the non obstante clause only overrides statutory provisions and not contracts, the Court refused to entertain the point because:
- It had not been raised in the High Court or in the original pleadings, and surfaced for the first time by a supplemental proceeding in the Supreme Court.
- On merits, the argument was untenable: Section 12 explicitly empowers the Custodian to cancel a lease or vary its terms, an “absolute and unqualified” power incompatible with the restriction suggested by the appellants.
The Court emphasised that the non obstante clause merely ensures Section 12 prevails over conflicting statutes; it does not limit the Custodian’s express contractual powers. The Court further declined to consider issues relating to the conditional agreement for sale of the mills and factory because those matters had never been litigated in the writ proceedings.
Holding and Implications
The appeal is dismissed with costs.
Direct Effect: The Custodian’s notice (Exhibit C) is upheld insofar as it seeks cancellation of the lease. Directions regarding movables remain invalid per the High Court’s unchallenged findings. Broader Implications: The decision confirms, in light of the 1954 amendment, that Custodians possess retrospective statutory authority to cancel or vary leases created by themselves, reinforcing administrative control over evacuee property. No new principle beyond statutory interpretation is established.
Venkatarama Ayyar, J.— This appeal raises a question as to the powers of a Custodian of Evacuee Property to cancel a lease granted by him under Section 12 of the Administration of Evacuee Property Act (31 of 1950), hereinafter referred to as the Act. Messrs Abdul Karim and Brothers owned, along with certain other properties which are not the subject-matter of the present appeal, three mills with bungalows and chawls at Ambernath in Thana district and the Bobbin Factory at Tardeo in Bombay. They having migrated to Pakistan, these properties were declared by a notification dated 12-9-1951 issued under Section 7 of the Act as evacuee property, and under Section 8(1) of the Act, they became vested in the respondent as the Custodian for the State. The appellants are displaced persons, and on 30-8-1952 the respondent entered into an agreement with them, Exhibit A, which is, as aptly characterised by learned counsel for the appellants, of a composite character, consisting of three distinct matters. There was, firstly, a demise under which the mills and the factory in question were leased to the appellants for a period of five years on the terms and conditions set out therein. Secondly, there was a sale of the stock of raw materials, unsold finished goods, spare parts, cars, trucks and other movables which were in the mills and the factory, with elaborate provisions for the determination and payment of the price therefor in due course. And thirdly, there was an agreement to sell the mills and the factory to the appellants in certain events and subject to certain conditions. There was also a clause for referring the disputes between the parties to arbitration.
2. In pursuance of this agreement, the appellants were put in possession of the mills and the factory on 31-8-1952. On 12-2-1954 the respondent issued a notice to the appellants, Exhibit C, wherein he set out that the appellants had systematically committed breaches of the various terms on which the properties had been leased to them, and called upon them to show cause why the lease should not be cancelled and why they should not be evicted. The notice then went on to state that the respondent considered it necessary to issue certain directions for the “preservation of the demised premises and the goods and stock-in-trade, etc. lying in the demised premises”, and the appellants were accordingly required not to remove the stock or raise any money on the security thereof, and to send daily reports to the Custodian, of the transactions with reference thereto. Presumably, these directions were given under Section 10 of the Act. On 13-2-1954 the appellants appeared before the respondent, and contended that he had no authority to issue the notice in question under Section 12, and that it was therefore illegal. Apprehending that the lease might be cancelled, and that they might be evicted, the appellants filed on 16-2-1954 the application out of which the present appeal arises, for a writ of certiorari for quashing the notice. Exhibit C, and for a writ of prohibition restraining the respondent from taking any further action pursuant thereto.
3. In support of the petition, the appellants urged that Section 12 under which the respondent purported to act authorised the cancellation of only leases granted by the evacuee and not by the Custodian himself, and that no directions could be given under Section 10 as it applied only to properties of the evacuee, and that by reason of the sale, the movables in question had become the property of the appellants. The petition was heard by Tendolkar, J., who stated the points for determination thus:
“(1) Whether the Custodian has power under Section 12 of the Administration of Evacuee Property Act, 1950, to terminate a lease granted by himself, and
(2) Whether the directions given by the Custodian are beyond the jurisdiction conferred upon him by Section 10 of the said Act?”
On the first question, he held that Section 12 applied only to leases granted by the evacuee and not by the Custodian, and that therefore the notice, Exhibit C, was ultra vires the powers of the Custodian under that section. On the second question, he held that Section 10 applied only to properties of the evacuee, and that the movables in respect of which directions were given, ceased to be the property of the evacuee by reason of the sale in favour of the appellants, and that in consequence, the directions with reference to them were unauthorised. In the result, the application was allowed.
4. The respondent took the matter in appeal, and that was heard by Chagla, C.J and Dixit, J. By their judgment dated 13-4-1954, they held that on the plain language of Section 12 it would apply whenever there was a lease, and that lease was in respect of property belonging to the evacuee, that there was no warrant for imposing a further limitation on that section that that lease should also have been granted by the evacuee, and that accordingly the Custodian had power to issue the notice. Exhibit C, for cancelling the lease. As regards movables, however, they agreed with Tendolkar, J. that for the reasons given by him the Custodian had no authority under Section 10 to issue any directions with reference thereto. The appeal was accordingly allowed insofar as it related to the lease but dismissed as regards movables.
5. Against this judgment, the appellants have preferred this appeal on a certificate granted by the High Court under Article 133(1)(b), and the only point that arises for determination therein is as to whether the Custodian has the power under Section 12 to cancel a lease granted by himself and not by the evacuee. But that question is no longer open to argument, as there has been subsequent to the decision of the court below legislation which concludes the matter. Section 5 of the Administration of Evacuee Property (Amendment) Act, 1954 (42 of 1954) enacts the following Explanation to Section 12 of Act 31 of 1950:
“In this sub-section ‘lease' includes a lease granted by the Custodian and ‘agreement' includes an agreement entered into by the Custodian.”
And it provides that the Explanation “shall be inserted and shall be deemed always to have been inserted” in the section.
6. Mr Desai, learned counsel for the appellants, concedes that this amendment which is retrospective in operation would govern the rights of the parties in the present appeal, and that under the section as it now stands, the Custodian has the power — and had always the power — to cancel leases created not merely by the evacuees but also by himself. But he contends that this power could be exercised only so as to override a bar imposed by any law but not the contract under which the lease is held, and this result flows according to him from the language of the non obstante clause, which is limited to “anything contained in any other law for the time being in force”, and does not include “or any contract between the parties”. This was a contention which was open to the appellants on the terms of the section as it stood even before the amendment, but it was not put forward at any stage prior to the hearing of this appeal and that by itself would be sufficient ground for declining to entertain it which it may be noted is now sought to be raised by a supplemental proceeding under Order 16 Rule 4 of the Supreme Court Rules. On the merits also it is without any substance. The section expressly authorises the custodian to vary the terms of the lease, and that cannot be reconciled with the contention of the appellants that it covers no authority on him to go back upon his own contracts. The operative portion of the section which confers power on the Custodian to cancel a lease or vary the terms thereof is unqualified and absolute, and that power cannot be abridged by reference to the provision that it could be exercised “notwithstanding anything contained in any other law for the time being in force”. This provision is obviously intended to repel a possible contention that Section 12 does not by implication repeal statutes conferring rights on lessees, and cannot prevail as against them and has been inserted ex abundanti cautela. It cannot be construed as cutting down the plain meaning of the operative portion of the section. Vide the observations in Aswini Kumar Ghosh v. Arabinda Bose (1953) SCR 1 and Dominion of India v. Shrinbai A. Irani (1955) 1 SCR 206 on the scope of a non obstante clause. We must accordingly hold that the respondent was acting within his authority in issuing Exhibit C insofar as it concerned the lease granted in favour of the appellants.
7. It was next contended by Mr Desai that even if the Custodian had the power under Section 12 to cancel the lease in favour of the appellants, he had no power under that section to cancel the agreement to sell the mills and the factory to them, which was one of the matters contained in Exhibit A, that the notice, Exhibit C, was to that extent without jurisdiction, and that the respondent should accordingly be prohibited from cancelling that portion of Exhibit A in pursuance of Exhibit C. But the notice in terms refers firstly to the lease which it is proposed to cancel, and secondly to the movables in respect of which certain directions were given. In their petition under Article 226, it was the validity of the notice. Exhibit C, with reference to these two matters that the appellants challenged. Tendolkar, J. stated in his judgment — and quite correctly — that these were the two points that arose for determination. The question of the rights of the appellants insofar as they related to the purchase by them of the mills and the factory was not raised in the petition, and no contentions were put forward in support thereof at any stage of the proceedings. It is for the first time in the argument before us that those rights are sought to be agitated. Under the circumstances, we must decline to consider them. It will be sufficient if we observe that the rights of the appellants, if any, other than those arising out of the lease, are left open to the determination of the appropriate authorities, and that nothing in our decision should be taken as a pronouncement on those rights.
8. In the result, the appeal fails and is dismissed with costs.
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