Lull over Enemy Property must end

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Prime Minister Modi-led NDA government’s move to amend the existing Enemy Property Act, 1968 through an amended legislation, which is still pending in the Parliament, and government taking the ‘Ordinance Route’ have been hogging media limelight for past some months. Even after Supreme Court’s recent verdict that enemy property must go to the State if at all it is an enemy property, the Apex Court clarified that ‘it is a sensitive matter and it is for Parliament to debate on it and not the court.’Raja of Mahmudabad - MAM Khan (3)

In the aftermath of the Chinese aggression in 1962, specific properties of Chinese nationals in India were vested in the custodian designated by Central Government under the Defence of India Rules, 1962. Subsequently, after the Indo-Pak conflict, under the notification issued in September 1965, the Central Government vested the properties in India belonging to, held by, or managed on behalf of Pakistani nationals; entrusting the property and its appurtenances in the hands of the custodian with immediate effect.

Subsequently, the office of the Custodian of Enemy Property (CEP) was created under the Enemy Property Act, 1968, which empowered the government to set up a custodian to look after “enemy property”. It was used to confiscate all properties — movable (shares or bonds) or immovable (like buildings or land) — owned by people who chose to move to Pakistan and Bangladesh, which was created after the 1971 Indo-Pakistan conflict.

Pakistan unilaterally disposed of all the properties of Indians impounded by it in Pakistan — including in erstwhile East Pakistan — in violation of the Tashkent Declaration signed on January 10, 1966, — which included a clause, which said that India and Pakistan would discuss the return of the property and assets taken over by either side in connection with the 1965 conflict.

The Office of the Custodian of Enemy Property (CEP) has 16,547 ‘enemy properties’, which include both moveable and immovable properties. The immovable properties are valued at more than 1 lakh crore, while the movable property is valued at more than 3,000 crore. The CEP is currently fighting around 550 cases in the country as the India-based relatives of the owners of the properties, who shifted to Pakistan, have staked their claim to the assets.

Citizens of India are banned from entering any transactions by way of granting development rights, selling, transferring or mortgaging more than a third of a property in India declared as “enemy” Property. The office of the CEP is located in Mumbai with a branch in Kolkata. In the initial stages of the custodian’s functioning, courts supported the government’s action and upheld automatic vesting of enemy properties in the custodian and restrained themselves from interfering in the orders passed by the custodian. However, courts began to pass judgments that affected the CEPI’s powers under the Act.

Thus in Union of India v Raja MAM Khan, the Supreme Court on October 21, 2005, held that on the death of an enemy, the property devolves in succession and ceases to be enemy property if the successor is a citizen of India. The court added that the enemy subject has the power to sell the property by virtue of Section 6 of the Act. On divestment of the property, the divestee would be entitled to the actual profits by filing a suit, if so advised, the court had held.

New Amendment Bill

Modi government introduced the Enemy Property (Amendment and Validation) Bill, 2016 to amend the Enemy Property Act, 1968 and the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 in order to replace an ordinance promulgated to this effect on 7 January 2016. Apart from seeking to amend the existing Enemy Property Act, 1968, to vest all rights, titles and interests over enemy property in theCustodian for the Enemy Property for India, the new Bill also declares transfer of enemy property by the enemy, conducted under the Act, to be void and this applies retrospectively to transfers that have occurred before or after 1968. The Bill civil courts and other authorities from entertaining disputes related to enemy property.

Undoubtedly, the new amendment Bill was passed by the Lok Sabha on March 9, 2016; nevertheless, it was referred to a select committee of the Rajya Sabha. While it was being considered by the committee, the ordinance was re-promulgated for the second time on April 2, 2016. The committee submitted its report to the Rajya Sabha on May 6, 2016. The ordinance was then reissued for the third time on May 31, 2016, incorporating the amendments recommended by the committee. As the Bill could not be considered in Rajya Sabha, the ordinance was re-promulgated for the fourth time on August 28, 2016 and then again in December 2016.

The representatives of the four political parties — Congress, JD-U, CPI and Samajwadi Party — in Rajya Sabha, which were represented on the Select Committee, opposed the new Bill saying original law was balanced and fresh changes violate the basic principle of natural justice. While asserting that the proposed changes would result in punishing lakhs of Indian citizens and have no effect on any ‘Enemy Government’, the representatives of these four parties gave their dissent notes in the Select Committee report on amendments to the Enemy Property Act, 1968, which inter alia, stated: “The provisions of the present Bill, 2016 are contrary to the aforesaid principles and if allowed to be inserted in the Act, 1968, not only the entire balance will be disturbed but also the same would not sustain in the courts of law. Thus, we are submitting this dissent note with the request that the same may kindly be treated and circulated as part and parcel of the report of this committee.”

The Bill also prohibits civil courts from entertaining any disputes with regard to enemy property. It does not provide any alternative judicial remedy in terms of tribunals.

While disposing of a petition questioning the promulgation of Enemy Property (Amendment and Validation) Fifth Ordinance, 2016, the 3-member bench of the Supreme Court in its verdict on 6 February said that the enemy property must go to the State if at all it is an enemy property. The Apex Court further held: “If the issue is so serious and sensitive and the nation’s security is at risk, then you should debate in Parliament… We are agreeing with you that this needs to be debated but it is for Parliament to debate on the subject.”

Way forward

In the wake of Supreme Court’s recent advice to debate the issue in the Parliament, it devolves on the ruling dispensation to take into consideration the contentious provisions in the Bill relating to enemy property, including a retrospective clause which governments in states say will be difficult to implement along with the recommendations of the Rajya Sabha Select Committee. The Select Committee’s report reveals that initially 2,100 enemy properties were identified. Now it has risen to 16,000 which cast doubt on the mechanism of identification of the enemy properties and its continued vesting in the custodian. Besides, the state of Bihar has opposed the amendment depriving the rights of the legal heirs and successors of the legal heirs in the property vested in the custodian as a contravention of the principles of natural justice and canons of law as enshrined in the Constitution.

Since present ruling dispensation does not enjoy majority in the Rajya Sabha, it may like to call joint session of the Parliament to get the proposed amendment bill passed. However, it would be better if the Centre incorporates suggestions of the Select Committee in the proposed Bill and takes Opposition and state governments into confidence to reach a consensus.

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