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Smart Summary

Judgment Summary — Mahajan, J.

Factual and Procedural Background

A double-storeyed house, taken on rent in 1947 by Megh Raj (son of the petitioner Diwan Jhangi Ram), became evacuee property when its Muslim owners migrated to Pakistan. At that time the occupants were the petitioner, his son, and Har Dayal Dhingra (respondent No. 5). The Custodian allotted the house to the three occupants jointly at a joint rent.

When the Displaced Persons (Compensation and Rehabilitation) Act, 1954 came into force the house was acquired by the Central Government and included in the Compensation Pool; it was valued at Rs. 8,474. Both the petitioner and respondent No. 5 were displaced persons with verified claims. The net compensation due to the petitioner was Rs. 9,167; respondent No. 5 had already received his entire compensation and nothing more was due to him.

In 1956 the petitioner applied that the house be allotted to him at the departmental value (Rs. 8,474) with the balance of compensation paid in cash. At the Settlement Officer's proceedings respondent No. 5 stated (in February 1957) that he had already received his claim money and was not interested in purchasing the house; the petitioner's son relinquished his claim in favour of the petitioner. On 1 August 1957 it was decided the house should be transferred to the petitioner; a sale deed was executed on 28 May 1958 and registered on 2 June 1958.

On 30 September 1957 respondent No. 5 applied for horizontal division of the house. The Managing Officer rejected that application on 4 November 1957 on the ground that no compensation was due to respondent No. 5. An appeal to the Chief Settlement Commissioner was rejected on 19 February 1958 on the ground that the property was indivisible and no compensation was due to respondent No. 5.

Respondent No. 5 subsequently filed a petition under section 33 of the Act to the Central Government. The Central Government's proceedings produced a sequence of notes and orders: a 21 May 1958 direction to call the file and hear parties; clerical notes and retrievals of files; further consideration by Deputy Secretary (C) and an order of 4 June 1958 in which a member expressed willingness to allow horizontal division if physically possible; and finally the Secretary's short order of 9 June 1958 (“We should divide the property horizontally and be done with it”). A letter dated 14 June 1958 (Exhibit H) informed the petitioner of the intended horizontal division, which prompted the present writ petition.

Legal Issues Presented

  1. Whether the Central Government, exercising powers under section 33 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, could order the horizontal division of the house without independently determining that the property was divisible.
  2. Whether an order to divide the property horizontally by the Central Government after a sale had been executed and registered (28 May/2 June 1958) effectively amounted to setting aside the sale and, if so, whether such an order could be made without invoking rule 92.
  3. Whether a portion of a property can be allotted under the applicable rules to a person (here respondent No. 5) to whom no compensation was payable.

Arguments of the Parties

Petitioner's Arguments

  • It was contended before the authority that although the petitioner earlier stated disinterest, changed circumstances entitled him to resile from the earlier statement and seek allotment; reliance was placed on a ruling of Shri Falshaw (as read out by petitioner's counsel) supporting allowance of a change of position in changed circumstances.
  • Once the property had been sold to the petitioner (sale deed executed and registered), it ceased to be part of the Compensation Pool; no order cancelling that sale under rule 92 had been made, and therefore the dividing order was invalid.
  • The Central Government under section 33 had not made an independent finding that the property was divisible; prior competent authorities had found the property indivisible.

Respondent No. 5's Arguments

  • Respondent No. 5 (through his counsel at the Central Government hearing) denied having earlier stated disinterest and contended that if it were proved he had not made such a statement, his petition might succeed; he later asserted that he had made a statement of interest before the Managing Officer on 11-7-57.
  • At the section 33 hearing respondent's counsel produced rulings of the Allahabad High Court to the effect that a statement made on oath is binding and a person cannot subsequently change it; this argument supported rejecting the petitioner's attempt to resile.

Central Government / Secretary's Approach (as recorded)

  • At the Deputy Secretary(C) hearing, an officer took a non-legalistic, redress-oriented view: though legal points suggested denying allotment because of the petitioner's prior statements, equity and practical considerations (including the view that a horizontal division might be physically possible) warranted relief; the Deputy Secretary indicated willingness to allow horizontal division if physically feasible.
  • The Secretary's subsequent order (9 June 1958) consisted of a one-line direction to divide the property horizontally, without an express record of independent findings or reasoning in the file.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Lal Chand v. The Chief Settlement Commissioner, C.W. No. 399-D of 1957 (decided by Grover, J. on 10 Aug 1959) Cited in connection with the proposition that an authority exercising powers under section 33 acts in a quasi-judicial capacity. The court relied on this reference to support the view that the Central Government, acting under section 33, was required to make an independent, quasi-judicial determination (e.g., on divisibility) before passing orders affecting rights.
Thakur Jaishi Ram v. The Chief Settlement Commissioner, New Delhi. 1958 60 P.L.R. 45 Cited for the principle that a sale of evacuee property, once effected, cannot be set aside without resort to the procedure under rule 92. The court treated this decision as authority supporting the proposition that the dividing order (which had the effect of cancelling the sale) could not be validly made without invoking rule 92.
Lal Devi v. Deputy Chief Settlement Commissioner, New Delhi. C.W. No. 1242 of 1959 (decided by Grover, J. on 25 Aug 1960) Cited for the same principle that cancellation of a completed sale requires resort to rule 92. The court grouped this case with others to show consistent authority that a sale cannot be cancelled except under the limited circumstances and procedure of rule 92.
Shri Khushabi Mal v. The Assistant Settlement Commissioner, Jullundur. C.W. No. 637 of 1959 (decided 6 Oct 1960) Cited for the principle that a sale cannot be cancelled once effected without following rule 92. Used by the court as further corroboration that the division order (amounting to cancelling the sale) was without jurisdiction in the absence of rule 92 proceedings.
Govind Ram v. Regional Settlement Commissioner, Rajasthan, Jaipur. A.I.R. 1960 Rajasthan 177 Cited for the proposition that cancellation of an effected sale requires adherence to rule 92 procedure. Also relied upon as authority that supports the court's conclusion that the Central Government's division order, which practically set aside the sale, could not be validly made without resort to rule 92.

Court's Reasoning and Analysis

The court's reasoning proceeds from the factual and procedural record and from the statutory framework:

  1. The court emphasized that the Central Government's authority under section 33 must act consistently with the Act and the rules and that the authority is performing a quasi-judicial function (a proposition supported by reference to Lal Chand). Consequently, before altering rights established by earlier orders, the Central Government was required to apply its mind and reach independent findings after hearing the parties.
  2. The competent authorities (Managing Officer and Chief Settlement Commissioner) had expressly found the property to be indivisible and had rejected respondent No. 5's claim on the ground that no compensation was due to him. The court found no independent judicial determination by the Central Government under section 33 that the property was divisible; rather, the file notes show a sequence of clerical referrals and a one-line Secretary's order that did not reflect an independent finding or reasons.
  3. The rules governing allotment were considered: rule 22(2) confers a power to allot a portion of a building if it is otherwise divisible, but that power presupposes divisibility. The proviso to rule 30 (quoted in the opinion) contemplates partition only where property can suitably be partitioned and that divided properties be offered to those to whom compensation is payable. The court noted respondent No. 5 had no compensation payable, raising a further inconsistency in offering him a divided portion.
  4. The court observed that the property had been sold to the petitioner (sale deed executed and registered), and therefore it ceased to be part of the Compensation Pool. An order dividing the property after such a sale would, in effect, set aside the sale. The statutory procedure for setting aside a sale is contained in rule 92, and no order under rule 92 had been passed. The court relied on several precedents to hold that cancellation of a sale once effected cannot be done except under rule 92.
  5. The combination of (a) lack of an independent finding of divisibility by the Central Government under section 33, (b) the prior finding of indivisibility by competent authorities, (c) the fact that respondent No. 5 had no compensation payable, and (d) the existence of a completed sale without any rule 92 proceeding, led the court to conclude that the Central Government's dividing order was without jurisdiction and liable to be quashed.
  6. The court also recorded procedural shortcomings in how the file was handled—multiple clerical notes, marking to different officers, and the Secretary's perfunctory one-line order—illustrating that the requisite application of mind and reasoned decision-making had not occurred.

Holding and Implications

Holding: The writ petition is allowed and the impugned order of the Central Government made under section 33 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954 is quashed.

Implications / Direct Consequences:

  • The Central Government's order to divide the house horizontally (as recorded by the Secretary on 9 June 1958 and communicated by the letter dated 14 June 1958) is quashed for want of jurisdiction and for failure to make the independent findings required of a quasi-judicial authority under the Act and rules.
  • The court treated the dividing order as effectively setting aside an already completed sale to the petitioner; such a setting aside could not validly be done without following rule 92, which was not invoked. The court therefore restored the legal effect that the sale could not be cancelled by the impugned order.
  • Costs were awarded in favour of the petitioner against respondent No. 5 in the sum of Rs. 200. No costs were charged against the Central Government; the Government had intimated it was not interested in defending the petition.
  • The matter was decided ex parte against respondent No. 5 because he did not appear at the final hearing.

The opinion does not purport to declare a novel precedent beyond applying existing rules and the cited authorities to the facts of this case; the court confined its decision to quashing the impugned order and awarding costs as stated above.

Disposition: Petition allowed; impugned Central Government order under section 33 quashed. Costs: Rs. 200 against respondent No. 5; no costs against the Central Government.

Show full summary ...

    Dewan Jhangi Ram v. Union Of India And Others .

    Mahajan, J.:— This writ petition discloses how serious bungling can occur if the matter is left to the clerical staff and the Government officers pass orders without applying their mind in the matter. The facts giving rise to this petition are not only interesting but show how the provisions of law are sometime abused in this country. A double storeyed house was taken on rent in the year 1947 by Megh Raj son of the petitioner Dewan Jhangi Ram, from its Muslim owners. The Muslim owners migrated to Pakistan during the 1947 disturbances and the house accordingly became evacuee property and vested in the Custodian of Evacuee Property. At the time when the house became evacuee property it was in the occupation of the petitioner, his son and Har Dayal Dhingra, respondent No. 5, who is the brother-in-law of the petitioner's son. The Custodian allotted this house to all the three occupants jointly at a joint rent of Rs. 22/8/- per mensem. On coming into force the Displaced Persons (Compensation and Rehabilitation) Act, 954 (Act No. 44 of 1954) this house was acquired by the Central Government and formed part of the Compensation Pool. The house was valued by the Department at Rs. 8,474/-. Petitioner as well as respondent No. 5 are displaced persons and hold verified claims. The net compensation allowable to the petitioner amounted to Rs. 9,167/- whereas respondent No. 5 had received the entire compensation payable to him and at the relevant time nothing was due to him towards compensation. In the year 1956 the petitioner made an application for payment of the compensation to him and stated the mode of compensation as follows:—

    2. That the house in his possession be allotted to him on the value fixed by the Department i.e Rs. 8,474/- and after deducting this price the balance of the compensation due to him be paid in cash. In view of the petitioners application all the occupants of the house were asked to appear before the Settlement Officer. They did appear. Before the Settlement Officer respondent No. 5 stated that he has received his full compensation and therefore was not interested in the purchase of the house. So far as the petitioner's son is concerned he gave up his claim to the house in favour of his father. On 1st of August, 1957, it was decided that the house should be transferred to the petitioner. Accordingly a sale deed was executed on 28th of May, 1958, and was registered on the 2nd of June, 1958. After this on the 30th of September, 1957, respondent No. 5 applied for the horizontal division of the house. His application was rejected by the Managing Officer on the 4th of November, 1957, on the ground that no compensation was due to respondent No. 5. Against this decision an appeal was taken by him to the Chief Settlement Commissioner and that was rejected by the Chief Settlement Commissioner on the 19th of February, 1958, on the ground that the property was indivisible and that no compensation was due to respondent No. 5. Then comes the petition by respondent No. 5 under section 33 of the Act which has given rise to all this mischief. It will be proper at this stage to set out the provisions of section 33 because in my view the impugned order could not be passed under those provisions. Section 33 is in these terms:—

    “33. Certain residuary powers of Central Government.— The Central Government may at any time call for the record of any proceeding under this Act and may pass such order in relation thereto as in its opinion the circumstances of the case require and as is not inconsistent with any of provisions contained in this Act or the rules made thereunder.”

    3. At this stage it will be proper to set out in detail what transpired when this section 33 petition was dealt with by the Central Government. After notices to the parties had been issued and in their presence on the 21st of May, 1958, the following order was passed:—

    “Diwan Jhangi Ram stated that during the course of the proceedings of the case before Shri Kalra, Settlement Officer, Khan Market, Shri Hardial Dhingra made a statement in February, 1957 that he had already received his claim money in cash and was not interested in the purchase of this house, which might be sold to Diwan Jhangi Ram.

    2. Shri Hardial Dhingra denied having made such a statement and stated that if it was proved that he had made such a statement, his petition may be dismissed. The relevant file (No. D/G.M/63872.Genl./16—Compensation appn. of Diwan Jhangi Ram) may be called. Parties to appear on 29th May, 1958.”

    4. After this order there is a note by a clerk dated 27th of May, 1958, which is in these terms:—

    “Reference above. The relevant compensation file of Diwan Jhangi Ram is placed below. The statement of Shri Hardial Dhingra referred to will be found at flag/K in the compensation file. It is clear that Shri Dhingra had stated on solemn affirmation before the Settlement Officer on 28-2-57 that he was not interested in purchasing the house now under dispute.

    Attention is, however, invited to the fresh letter of Shri Dhingra at pages 17-18/???. He has stated therein that subsequently statement was made by him before the Managing Officer on 11-7-57 that he was interested in purchasing the house. He has further stated that decision for transferring the entire house to Diwan Jhangi Ram was taken on the basis of subsequent statements made before the Managing Officer. He has therefore requested us to send for the file containing subsequent statements for examination. Although in view of para. 2 of D.S(S)'s remarks at prepage as well as his statement at flag/K. Shri Dhingra has lost his case, it is for consideration whether the file referred to by Shri Dhingra may now be called for as per D.F.A”.

    5. He, however, for reasons best known to him and which are universally known and need not be specifically stated, marked the case not to the officer who had passed the order dated 21st of May, 1958, but to another officer, Deputy Secretary (C), respondent No. 2. Respondent No. 2 then passed the following order:—

    “D.F.A may issue and the file in question obtained before 29th May, 1958.”

    6. Again follows the note by the same clerk at page 5 of the file and that is in these terms:—

    “D.S(C) may kindly see his remarks dated 27-5-58 at pre-page. The relevant file has been obtained from the R.S.C's office and is placed below at flag/X. Attention is invited to pages 13, 14, 15 and 16 of that file. In his statement dated 11-7-57 on p. 14 in file ibid, Shri Hardial Dhingra had stated that the ground floor being an independent unit may be transferred to him on cash payment payable in instalments. But on the report of Managing Officer the Addl. S.C decided to transfer the entire house to Diwan Jhangi Ram as he is a claimant and as the house being small one has been evaluated as a whole. In this connection p. 13 of the file ibid may be perused.

    Submitted for orders. The remarks dated 21-5-58 of D.S.S at p. 37 ante, may also be seen before taking any decision. The parties will appear before D.S(C) at 3 p.m to-day.”

    7. He again marked it to respondent No. 2. After this 4th of June, 1958, was fixed by respondent No. 2 for the purpose of satisfying himself about the point whether the petitioner can retrace his earlier statement that he is not interested in the property and if so, is there any time limitation for this. The parties then appeared on the 4th of June, 1958, and then the following order was passed:—

    “2. The counsel for the petitioner read out a ruling of Shri Falshaw pointing out that in changed circumstances, the person aggrieved can resile from his earlier statement as has been done by the petitioner. The counsel for the respondent produced rulings of Allahabad High Court that once a statement is made on oath, it is binding on the person and he cannot change it subsequently.

    3. The case has two sides—one the legal aspect and the other redress based on equity. So long as the legal aspect is concerned, the petitioner having made categorical statements twice foregone his right for allotment of the property in question. The appeal can be rejected on this basis straightaway. The counsel for the respondent insisted on this.

    4. Looking on the other side of the case and the subject matter of the appeal as also from the point of view of the spirit of section 33 under which such appeals are made, I feel that a redress is due to the petitioner on the ground that a horizontal division of the property is possible and the petitioner is in occupation of a part of it and is willing to purchase it. It is true that the petitioner made a statement that he is not interested in the property and subsequently changed his mind. Is he to be penalized for his rash action particularly when he is not being debarred by Dty. S.C to purchase the property on this ground. Secy was of the view as would be seen from portion marked ‘X’ at page 2-N that the horizontal division of the property which is allottable may be allowed after giving notice to the other party.

    5. I am of the opinion that we should not take a very legalistic view of the petition and should not penalize the petitioner when a redress can be given to him. The counsel for the respondent stated that if the petitioner's request is to be considered on the merits of the case and not the legal issue raised by them, they would like to be heard again. I do not think we should call the parties again but should take a decision now. I have heard them at length and have considered their views. I am inclined to allow the horizontal division of the property if it is physically possible. Secretary may please see for orders.”

    8. Then the matter came to the Secretary and the Secretary on the 9th of June 1958, without caring to even read the papers passed the following order:—

    “We should divide the property horizontally and be done with it”

    as if he was getting rid of the file. Thereafter follows the letter dated 14th of June, 1958, to the petitioner witch is Exhibit ‘H’ attached to the petition informing him that the house is to be divided horizontally and this has led to the present petition by the petitioner.

    9. It will be seen from what has been stated above that the authority under section 33 nowhere come to the conclusion that the house was divisible. As a matter of fact the competent authority had held that the house was indivisible and was one unit. Moreover, before ordering the division of the house it was imperative on the authority under section 33 to come to an independent finding, after hearing the parties, as to the divisibility of the house. It cannot be disputed that the authority under section 33 is acting in a quasi judicial capacity. In this connection reference may be made to Civil Writ No. 399-D of 1957, Lal Chand v. The Chief Settlement Commissioner . C.W No. 399-D of 1957., decided by Grover, J. on 10th of August, 1959. It also cannot be disputed that the Central Government has the power under rule 22(2) to allot a portion of a building which is otherwise divisible, but in the instant case this power was never exercised. As I have already stated nobody applied his mind under section 33 as to whether the building was in fact divisible or not because an order rule 22(2) could only be passed after it had been determined that the building was divisible. Reference may also be made to proviso to rule 30 which is in these terms:—

    “Provided that where any swell property can suitably be partitioned the Settlement Commissioner shall partition the property and allot to each such person a portion of the property so partitioned having regard the amount of not compensation payable to him.”

    10. This proviso clearly shows that only those Properties can be divided which can be so divided suitably and also that the divided properties are to be offered to those to whom compensation is payable. In the present case no compensation at all was payable to respondent No. 5 and it is beyond my comprehension how he was offered this property in preference to a person to whom compensation was payable. Moreover, the order dividing the property was passed without hearing the petitioner and this order on that ground also is liable to be set aside. There is another way of looking at the matter. The property had been absolutely sold to the petitioner on the 28th of May, 1958 and once the property had been sold it no longer formed part of the Compensation Pool. The provision for setting aside sale is contained in rule 92. No order under rule 92 was ever passed in this case. It cannot be doubted that an order under rule 92 can only be passed in a very limited circumstances and none of these circumstances existed in the present case. It has been held in the following cases that no order cancelling the sale can be passed once a sale of the evacuee property has been effected without having resort to rule 92:—

    (1) Thakur Jaishi Ram v. The Chief Settlement Commissioner, New Delhi . 1958 60 P.L.R 45..

    (2) Lal Devi v. Deputy Chief Settlement Commissioner, New Delhi . C.W No. 1242 of 1959., Civil Writ No. 1242 of 1959, decided by Grover, J. on 25th of August, 1960.

    (3) Shri Khushabi Mal v. The Assistant Settlement Commissioner, Jullundur . C.W No. 637 of 1959. Civil Writ No. 637 of 1959, decided on 6th of October, 1960.

    (4) Govind Ram v. Regional Settlement Commissioner, Rajasthan, Jaipur . A.I.R 1960 Rajasthan 177..

    11. The order dividing the house is virtually an order setting aside the sale and is, therefore, without jurisdiction. For the reasons given above I allow this petition and quash the order of the Central Government Under section 33 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (Act No. 44 of 1954). Before concluding I may mention that when this writ was filed and the matter was examined by the Government they realised the error they had committed and, therefore, intimated to this Court that they are not interested in defending this petition in order to save costs. I accordingly allow this petition and quash the impugned order. The petitioner will have his costs against respondent No. 5. No costs against the Central Government. The costs against respondent No. 5 are assessed at Rs. 200/-. Respondent No. 5 was represented by Mr. Bhawani Lal. The case was called yesterday and was again called this morning and I finished hearing of the matter at quarter past three sand no one has appeared for him. Therefore, I have decided the matter ex parte.

    12. Petition allowed

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    Comments

    Dewan Jhangi Ram v. Union Of India And Others .
    (Apr 28, 1961)