9911796707
TMI Blog1957 (1) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of that Company consisted of three factories with bungalows and chawls at Ambarnath in the district of Thana, a Bobbin factory at Tardeo in Bombay and the goodwill and other benefits of the business. These properties were notified as evacuee property under a notification, dated 12th September, 1951, issued by the Assistant Custodian of Evacuee Property, and in consequence thereof the properties become vested in the Custodian of Evacuee Property. By an indenture, dated 30th August, 1952, the Custodian entered into a composite agreement with the plaintiffs relating to three distinct matters. There was first a demise under which the nulls at Thana and the factory at Tardeo were leased to the plaintiffs for five years at an annual rental of ₹ 6,00,000/- payable by four quarterly installments of ₹ 1,50,00/ each, payable in advance on or before the 30th of each quarter. The plaintiffs also agreed to make a security deposit of ₹ 1,50,000/- for due performance of the covenant regarding payment of rent. Secondly there was a covenant under which the plaintiffs agreed to deposit ₹ 7,00,000/- as security for payment of the price of all stocks of raw materials, unsol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by that officer to the plaintiffs by notice, dated I2th February, 1954. That application was heard by my brother Mr. Justice Tendolkar, and he held by his order, dated 31st March, 1054, that the Custodian had no authority in exercise of powers under Section 12 of the Administration of Evacuee Property Act to cancel or terminate an agreement to which the Custodian was a party. Mr. Justice Tendolkar also held that the other directions given by the Custodian, which could not be split up as to make them applicable to evacuee property only, were also in excess of the jurisdiction of the Custodial). Accordingly Mr. Justice Tendolkar issued the Writ prayed for. 3. Against that order an appeal was preferred. The Court of Appeal held that the Custodian had. under Section 12 of the Administration of Evacuee Property Act, 1950, power to cancel the lease granted by him. It, was observed by the Court that there was no warrant for holding that the power Of the Custodian under Section 12 of the Administration- of Evacuee Property Act could be exercised only in respect of leases granted by the evacuee and that the power of the Custodian extended to all leases, the subject-matter of which was eva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was conceded by the plaintiffs at the hearing of the appeal that the amendment made by Act 42 of 1954, which included in the expression 'lease' a lease granted by the Custodian, was retrospective in operation. But it was contended that the Custodian had only power to override a bar which was imposed, by law but not under a contract under which a lease was granted. It was urged that the non-obstante clause in Section 10 did not affect any contract between the parties. Their Lordships of the Supreme Court rejected that contention. It was also urged that even if the Custodian had the power under Section 12 to cancel the lease in favour of the plaintiffs, he had no power under that section to cancel the agreement to sell the mills and the factory, and to that extent the impugned order was without jurisdiction and the Custodian should be prohibited from can calling that part of the order under the impugned notice. Their Lordships observed in dealing with that argument that the notice "in terms refers firstly to the lease which it is proposed to cancel, and secondly to the moveables in respect of which certain directions were given" and that in the application for the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the evacuee properties having been acquired by the Union Government with notice, the agreement of sale was binding upon them and the plaintiffs were entitled to enforce specific performance of the agreement against the Union of India as well as against the Custodian, there being an Implied negative covenant in the agreement of sale under which tile Custodian and the Union of India were bound not to sell the properties to any person or persons other than the plaintiffs in breach of the said agreement. Contending that the right to claim specific performance of the agreement of sale could not be enforced immediately, because the compensation payable to the plaintiffs by the Government of India had not been ascertained, the plaintiffs sought to obtain an injunction restraining the defendants from selling or agreeing or offering to sell the properties which are the subject-matter of the suit. 6. The suit was resisted by the Custodian of Evacuee Property, who was the first defendant, on diverse grounds. It was contended inter alia that the written agreement, dated 30th August 1952, relied upon by the plaintiffs, was required by law to be registered and being unregistered was inad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the Court's discretion in granting the injunction prayed for should not be exercised. 7. The Union of India, who are the second defendants, by their written statement adopted the contentions raised by the Custodian of Evacuee Property. In addition, they contended that under the Displaced Persons (Compensation and Rehabilitation) Act, 1954, the Government of India had brought into existence a statutory compensation pool for just and fair distribution of the -evacuee assets amongst the entire body of displaced persons, that the suit properties being the most valuable items of evacuee property it was the duty of the authorities to see that the properties in the compensation pool were duly liquidated in the manner provided by the Act and that, any obstruction or hindrance therein was likely to result in considerable hardship to the displaced persons. It was submitted that the Authorities exercising powers under the Act were entitled and were bound to liquidate the assets in the compensation pool in a manner conducive to the greatest benefit to the entire community of displaced persons and the best way of achieving the result was to dispose of the properties in the compensatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... todian General was obtained. The learned Judge held that the Custodian, who was the only witness examined on behalf of the defendants, had no persona! knowledge and there being a possibility of an oral assent of the Custodian General, who it was alleged was present at the time when the negotiations were proceeding for the agreement which ultimately was executed on 30-8-1952, it was reasonable to hold that the plea that there was no assent of the Custodian General was not proved. Holding that the benefit of a contract to purchase property, was property he was of the view that by the operation of the notification issued under Section 12 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, the right of the plaintiffs could not be enforced against the property, the property having vested absolutely in the Central Government free from all in cumbrances. The learned Judge held that the Act was not ultra vires the Parliament of India. In his view, but for Clause (5) of Article 31 of the Constitution, the Act not having made provision for payment of compensation for extinction of the right of the plaintiffs, would have been regarded as ultra vires. He negatived the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts, vehicles and other moveables in the mills and the factory with provision for ascertainment of the price thereof. Finally there is an agreement to sell the mills and the factory to the plaintiffs subject to certain conditions. Even though these three agreements are incorporated in a single document, substantially there are three distinct agreements and the fact that the agreement, in so far as it relates to the demise of immovable property, may not be admissible in evidence and may not affect the immovable property referred to therein, does not prevent the Court from admitting the document in evidence in support of the agreement to sell the mills and the factory to the plaintiffs. The agreement to sell Immovable property is not by law required to be registered, and the document in so far as it relates to an agreement of sale of immovable property is admissible in evidence. As an agreement containing the present demise of the mills and the factory for a period of five years, the agreement was by law required to be registered, but the agreement to demise land being sever-able from the agreement to sell the mills and the factory to the plaintiffs, the plaintiffs are entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her agreed that in case the aggregate amount of compensation payable to the Lessees falls short of the value fixed for the demised premises, the Lessor shall be entitled to associate with the Lessees in the ownership of the proprietary interest to be allotted as aforesaid other displaced persons who have left industrial concerns in Pakistan, so that the total compensation payable to the Lessees and the others thus associated is equivalent to the total value of the demised premises, and the said demised premises shall then become the absolute property of the Lessees and others thus associated in proportion to the total compensation payable to each as finally determined. 21. The lease to be granted pursuant hereto shall be liable to determination earlier on the settlement of the claims of the Lessees and the allotment and transfer of the full proprietary interest in the demised premises as provided in Clause 17 to 20 hereof; provided that if the value of the full proprietary interest in the demised premises exceeds the amount of compensation payable to the Lessees part of such proprietary Interest in allotted to other persons as provided in Clause 20 hereof, the Lessees shall be at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the agreement it is" evident that the price for which the properties are agreed by Clause 18 to be conveyed to the plain, tills is indefinite. The price has to be determined by an expert appointed in this behalf by the Government of India, Ministry of Rehabilitation. The Government of India is not a party to this] agreement and is under no obligation to appoint] any person to determine the market value of the properties. The determination of the market value must, therefore, depend upon the volition of a person other than the parties to the agreement. The agreement also does not contain any indication whether the person designated in this behalf is to be accepted by the parties as an expert in ascertaining the market value. Again, the quantum of property to be Conveyed to the plaintiffs is indefinite. If the market value determined by the expert under Clause 17 is equal to or exceeds the amount of compensation payable to the plaintiffs under the Displaced Persons Claims Act, 1950, no difficulty may arise. But if the compensation is less, the plaintiffs cannot claim ownership of the proprietary interests in the entire properties agreed to be sold. Whether that interest is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made, be enforced. Mr. G.N. Joshi says that it was the contention of the defendants that there was no implied negative covenant in the agreement of sale relying on which, an injunction of the nature claimed in this suit can be granted in favour of the plaintiffs. It is true that a Civil Court may grant a perpetual injunction to prevent the breach of an obligation existing in favour of the plaintiffs expressly or by implication; but in considering whether an injunction should be granted where the obligation arises from a contract, the Court is guided by the rules and provisions contained in Chap. II of the Specific Relief Act. Section 56 of the Specific Relief Act provides inter alia that an injunction cannot be granted "to prevent the breach of a contract the performance of which would not be specifically enforced." As we have already observed, the agreement relied upon by the plaintiffs is such that the Civil Court would not grant specific performance thereof, and an injunction to prevent the breach of that agreement can evidently not be granted. 14. Strong reliance was, 'however, sought to be placed by Mr. K.T. Desai upon Section 57 of the Specific Relief Act, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laintiffs. On 30th June, 1954, the Custodian took possession of the properties in enforcement of the notice served by him under Section 12 of the Administration of Evacuee Property Act. The plaintiffs were, therefore, at the date of the suit, merely entitled to a personal claim against the Custodian or persons claiming under; him to obtain specific performance of the agreement. If specific performance be granted by the Court, the right may crystallise into one for ob-taming title to the immovable property and possession thereof, but so long as specific performance is not granted the right is merely a personal right against the owner. 16. It is true that the right to enforce specific performance is not, dependent under the terms of the agreement, upon the subsistence of the relation of landlord and tenant at the date when the- claim for specific performance is made or even the claim for injunction is made. As we have already pointed out, the agreement relating to the grant of a lease of the proper Lies and the' agreements relating to sale of moveable and in moveable properties are distinct agreements and even though in Clauses 17 to 21 the expressions 'lessor' and lesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Displaced Persons (Compensation and Rehabilitation) Act, 1954, by its first sub-section, enables the Central Government to acquire evacuee property for a public purpose, if it is of opinion that it is necessary so to do Sub-section (2) of Section 12 provides: "On the publication of a notification under Sub-section (1), the right, title and interest of any evacuee in the evacuee property specified in the notification shall, on and from the beginning of the date on which the notification is so published, be extinguished and the evacuee Property snail vest absolutely in the Central Government free from all encumbrances". Section 13 provides for payment of compensation to an evacuee in respect of property acquired under Section 12 in "accordance with the principles and in the manner agreed upon between the Government of India and Pakistan. Section 14 contemplates the creation of a compensation pool for payment of compensation and rehabilitation grants to displaced persons and the compensation pool is to consist inter alia of "all evacuee Property acquired under Section 12, including the 'sale proceeds of any such property and all profits and income accr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forceable notwithstanding the notification against the defendants. There is no dispute that the rights of the plaintiffs are not evacuee property. They relate merely to evacuee property or may be enforceable against evacuee property. The plaintiffs are not evacuees and the rights vested in them are also not evacuee property. Only the right, title and interest of the evacuees, viz., Messrs, Ahmed Abdul Karim Bros, Ltd; were notified for acquisition and those rights only have vested in the Central Government absolutely. But it is not because the right to purchase the properties is evacuee property that the plaintiffs are unable to enforce it: it is because the Central Government takes the property free from all encumbrances the plaintiffs are unable to enforce their rights against the property. 20. Mr. K.T. Desai also contends that the provision of Section 12 of the Displaced Persons (Compensation and Rehabilitation) Act, in so far as it operates to vest in the Central Government evacuee property free from all encumbrances without obligation to pay compensation to the persons entitled to the benefit of the encumbrances thereon is inconsistent with Article 31(2) of the Constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement by specific performance against the Union, of India. The right of the plaintiffs to claim damages for breach of the agreement is not affected by Section 12 of the Act. 21. Even assuming that there has been deprivation of property of the plaintiffs by the Act in our view, it is saved by Clause 5 (b) (iii) of Article 31 of the Constitution. By that clause it is provided that nothing in Clause (2), i.e., relating to taking possession of or acquiring of property for a public purpose, "shall affect the provisions of any law which the State may hereafter make" with respect to property declared by law to be evacuee property. Evidently the Displaced Person (Compensation and Rehabilitation) Act is legislation with respect to evacuee property. 22. It was urged by Mr. Desai that Clause (5) did not apply, because the Administration of Evacuee Property Act did not declare any property to be evacuee property, but it merely prescribed the procedure for declaring property to be evacuee property. Mr. Desai submitted that legislation which was saved by Clause from the operation of Clause(2) was legislation with respect to evacuee property where evacuee property was so declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in that expression property which was not at the date of the commencement of the Constitution according to the definition in force evacuee property, it would in substance enable a subordinate legislature, without following the procedure prescribed for amendment, of the Constitution, to amend the Constitution. Mr. Desai says that, only that class of evacuee property, which could in law be declared to be evacuee property at the date when the Constitution was passed, must be regarded as evacuee property for the purpose of Clause and If the legislation related to that class of property, then only it is saved by Clause(5) of Article 31 of the Constitution and not otherwise. The expression! "evacuee property" has, however, not been defined! in the Constitution. If by law validly enacted certain property is declared to be evacuee property and legislation is enacted with respect to that property, it must, in our judgment, fall within the exception contained in Clause(5) of Article 31. We' are not impressed by the circumstances that by altering the definition of ''evacuee property" in an Act in force at the date of the Constitution a subordinate legislature wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult to appreciate how the plaintiffs can press into service in this case the equal protection clause of the Constitution. As has often been said, the Constitution does not contemplate equality of all laws or application of laws equally to every person. Classification is permitted, a classification based on a rational principle between persons or objects, the equal' protection, clause is not violated. The Legislature in this case for Certain reasons appears 'to have thought it necessary to provide that evacuee property may be acquired by the Central Government and on acquisition the property shall vest absolutely in that Government free from all encumbrances. The Legislation deals with evacuee property and the acquisition thereof and the consequent destination of that property. The evacuee property notified under Section 12(1) vests in the Central Government free from all encumbrances, and it is difficult to appreciate how the State has by issuing the notification deprived the plaintiffs of equality of law or equal protection of the laws. In our view, there is no substance in the contention that the equal Protection clause of the Constitution lifts' 'been vio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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