TMI Blog1976 (8) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... resented at the Collector's Office, Madras and was duly stamped on June 27, 1949. After obtaining the clearance certificate from the Income-tax Department, the Registrar registered it on August 11, 1949 Rs. 30.000/-, the balance; of the consideration was paid before the Registering Officer to Mr. M.H. Gani who held a power of attorney from the vendor. 3. On June 13, 1949. Ordinance XII of 1949 was promulgated. The Ordinance was extended to Madras on August 23, Ordinance XII of 1940 was repealed by Ordinance 27 of 1949, which in turn was re-placed by the Administration of the Evacuee Property Act, 1950 (Central Act 31 of 1950) (hereinafter referred to as the Act). The Act had retrospective operation with effect from August 14, 1947. Section 40 of the Act [corresponding to Section 25(2) of Order 12], provided that no transfer made after the 14th day of August, 1947 but before the 7th day of May, 1954 by any person of any property belonging to him which may subsequently be declared to be evacuee property, would be valid unless the transfer was confirmed by the Custodian-General of Evacuee Property. 4. On December 19, 1949, the vendee Rabia Bai, applied for confirmation of the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of Rs. 2,40,000/-The claim was registered by the Assistant Custodian on October 1, 1954. 8. Thereafter, the Act was amended by Act 91 of 1956. By a notification, dated February 20, 1957, the aforesaid Rule 22 was deleted. 9. Rabia Bai's aforesaid appeal (Civil Appeal No. 22 of 1956) was dismissed by this Court on January 12, 1961. That judgment is reported as Rabia Bai v. Custodian General of Evacuee Property 1982CriLJ423 . 10. Rabia Bai repeatedly petitioned for the return of the sale consideration of Rs. 2,40,000/- to her but without success. She petitioned to the Prime Minister on May 16, 1966. Thereupon, she was informed by a letter, dated August 1, 1966, by the Deputy Custodian, Evacuee Property, Bombay, that no third party claim against the Immovable property is payable by his office as Rule 22 of the Administration of Evacuee Property (Central) Rules has since been deleted as a result of the amendment of Section 10(m) by Act 91 of 1956. 11. By an order, dated August 18, 1966, Government of India directed that all the 'surplus balance' of the evacuee pool lying in the personal deposit account of the Custodian be transferred to the Dy. Accountant Gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) that payment of Rs. 2,40,000/- was made by Rabia Bai to the evacuee in pursuance of the infructuous sale, the payment is also not vitiated in any manner as the sale was refused confirmation, not because of want of bona fides in the transferee, but on account of want of bona fides in the transferor. The respondents are, therefore under a statutory obligation to refund to the appellant the sale price paid by her . 16. With regard to the argument that she could not be paid because the fund with the Custodian had been transferred in compliance with the orders of the Government of India to the compensation pool formed under Section 14(l)(b) of the Rehabilitation Act, it was held that the Custodian was competent to transfer only surplus fund left with him, in excess of what was required by him for meeting the outstanding claims registered under Rule 22. The Appellate Bench spelled out this conclusion from a construction of the words such cash balances occurring in Section 14(l)(b), and the expression surplus fund used in the Central Government order asking the Custodian to transfer funds to the account of the Deputy Accountant General as part of the compensation pool. In this view, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an evacuee within the meaning of section 2 or the property of the transferor is declared or notified to be evacuee property within the meaning of this Act, unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act. (2)* * * (3) An application under Sub-section (1) for the confirmation of any transfer may be made by the transferor or the transferee or any person claiming under or lawfully authorised by either of them to the Custodian within two months from the date of the transfer or within two months from the date of the declaration or notification referred to in Sub-section (1) whichever is later, and the provisions of Section 5 of the Indian Limitation Act, 1908 shall apply to any such application. (4) Where an application under Sub-section (1) has been made to the Custodian for confirmation, he shall hold an inquiry in respect thereof in the prescribed manner and may reject the application if he is of opinion that- (a) the transaction has not been entered into in good faith or for valuable consideration; or (b) the transaction is prohibited under any law for the time being in force; or (c) the transaction ought not to be confirmed for any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that the whole of the price had actually been paid by the claimant as under : That by 29.4.1949, Rabia Bai had paid a sum of Rs. 1,50,000/-to the evacuee, and by 30.5.1949, she had paid Rs. 2,10,000/- to the evacuee, and a further sum of Rs. 30,000/- was paid to the evacuee's agent on the date of registration of the document i.e. 11.8.1949 before the Sub-Registrar. He further found that so far as the vendee was concerned, she had purchased the property in good faith for very valuable consideration and there was no mala fides on her part. It was on these findings that he registered her claim under Rule 22 for Rs. 2,40,000/- against Gani Market No. 20. Godown Street, G.T. Madras. 25. Mr. S.N. Prasad, appearing for the appellants contends that the order of the Assistant Custodian registering Rabia Bai's claim for Rs. 2,40,000/- was a nullity because the transaction was not a bona fide one there being lack of good faith both on the part of the vendor and the vendee. In any case, proceeds the argument, a sale which is not confirmed under Section 40(4)(a) owing to the absence of good faith either in the vendor or the vendee, cannot be deemed to be a bona fide transaction for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racter of the conduct of the claimant which primarily determines the character of the transaction. Therefore, if the vendee claimant in purchasing the property acted in good faith, for the purposes of Rule 22, the sale would be a bona fide transaction, notwithstanding the fact that there was lack of good faith on the part of the vendor. Again, the acid test of the vendor's bona fides under this Rule would be, whether he had purchased the property for adequate valuable consideration ? 28. In the instant case, the Assistant Custodian found that this test was amply satisfied. This finding of fact was not-and indeed could not be-challenged before the High Court. It is therefore too late in the day to urge that Rabia Bai's claim was not duly registered in accordance with Rule 22. 29. Further question that falls to be considered is : What was the consequence of this registration ? 30. According to Mr. Prasad, the registration was an administrative act required to be done merely for a statistical purpose. Our attention has been invited to Sub-Rule (3) of the Rule, which provided that merely registration of a claim shall not entitle the claimant to payment.... 31. While it is true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deletion of Rule 22 and the amendment of Section 10 (2) is concerned, the same is no longer res Integra. In Raja Bhanupratap Singh v. Custodian [1966]1SCR304 a similar argument was advanced. Shah J. (as he then was) speaking for the Court, negatived the argument, thus : We are, however, unable to agree that because of the amendment made in Section l0(2)(m) and the deletion of Rule 22 the power which is vested in the Custodian under Section 10 (2)(n) must be held restricted. Sub-section (1) of Section 10 sets out the powers of the Custodian generally, and the diverse clauses in Sub-section(2) illustrate the specific purposes for which the powers may be exercised, and there is no reason to think that the clauses in Sub-section (2) are mutually exclusive. If power to pay the debts was derived both under cls. (m) and (n) as it appears it was, deletion of the provision which authorised the Custodian to pay debts due by the evacuee . to any person from Clause (m) and Rule 22 setting up the machinery for registration of debts did not, in our judgment, affect the power which is conferred by Clause(n) by Sub-section (2) and also by Section l0(l). In our judgment, the power to administer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came into force on October 9, 1954 conceives the Constitution of a Compensation Pool. It provides that such Pool shall consist of : (a) all evacuee property acquired under Section 12, including the sale proceeds of any such property and all profits and income accruing from such property; (b) such cash balances lying with the Custodian as may, by order of the Central Government, be transferred to the compensation pool; (c) such contributions, in any form whatsoever, as may be made to the compensation pool by the Central Government or any State Government; (d) such other assets as may be prescribed. 36. Sub-section (2) further provides that the Compensation Pool shall vest in the Central Government free from all encumbrances and shall be utilised in accordance with the provisions of the Act and the rules made thereunder. 37. The controversy is about the true import of the expression cash balances lying with the Custodian used in Clause (b) of Sub-section (1) of Section 14. 38. According to Mr. Prasad such cash balances will cover all funds in their entirety lying in the deposit account of the Custodian which may be transferred by an order of the Central Government to the Compensatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck with him so much of the funds in his deposit as were necessary to meet the verified claims against evacuees or their properties. Such a course on his part would have been perfectly legal and also in conformity with the final directions issued for transfer of surplus balances by the Central Government. Only the 'cash balances' which were validly transferred could legally form part of the Compensation Pool. On this point we agree with the High Court that the Custodian had neither the power nor the authority to transfer the entirety of funds to the Compensation Pool. 41. Even if it is considered for the sake of argument that the last order of the Government was a direction to transfer the entirety of funds including those relating to the property of the evacuee, Abdul Ghani Jan Muhammad, without keeping back what was required for paying the registered claims of Rabia Bai, then the same would be contrary to the intendment of Clause(b) of Section 14(l) to the extent of Rabia Bai's claim. 42. We are of opinion that in the peculiar circumstances of the case, the Appellate Bench of the High Court was right in directing the Custodian to refund a sum of Rs. 2,40,000/- to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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