Why the Enemy Property Ordinance Needed Parliament’s Reconsideration

Pranab Mukherjee re-promulgated the Enemy Property (Amendment and Validation) Ordinance for the fifth time since it wasn’t passed as an Act in parliament in the winter session.

Pranab Mukherjee waves to the media in New Delhi November 27, 2006. REUTERS/Adnan Abidi/Files

Pranab Mukherjee waves to the media in New Delhi November 27, 2006. REUTERS/Adnan Abidi/Files

On December 22, President Pranab Mukherjee approved the promulgation of the Enemy Property (Amendment and Validation) Ordinance for the fifth time. This has earned him dubious distinction on two grounds – one, it makes him the first president to re-promulgate an ordinance repeatedly for four times, after its initial promulgation. Second, he is also the first one to approve an ordinance, despite expressing his reservations over its repeated re-promulgation.

An ordinance, under Article 123 of the constitution, will expire at the end of six weeks after the reassembly of parliament if it is not disapproved by both the houses or replaced by an Act during the session. Hence, a government, which fails to replace an ordinance by an Act during the session, finds it necessary to re-promulgate it after the session if required.

After the outbreak of Second World War in 1939, the Defence of India Act, 1939 was enacted and the Defence of India Rules, 1939 made thereunder. The office of the custodian of enemy property for India, Mumbai (then known as controller of enemy firms), was constituted to prevent paying money to the enemy (i.e. the Aix powers) and to administer enemy properties in India till peace was restored.

Properties left by the enemy, enemy subjects and enemy firms were vested in the custodian. These properties continued to remain vested in the custodian even after the war ended.

The 1968 Act

After the Chinese aggression in 1962, specific properties of Chinese nationals in India were vested in the custodian as per the Defence of India Rules, 1962. Subsequently, after the Indo-Pak conflicts of 1965 and 1971, the movable and immovable properties of Pakistani nationals automatically got vested in the custodian and their vesting was continued under the 1968 Act. A similar process for Indian-owned properties occurred in Pakistan.

Since then, the government of Pakistan has disposed of all the properties of Indians impounded by it in Pakistan – including in erstwhile East Pakistan – in violation of the Tashkent Declaration. This declaration – signed on January 10, 1966 – 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.

Pakistan’s unilateral action provides a belated vindication of the present ordinance, even though the Bill seeking to replace it also refers to claims being made to regain these properties by the legal heirs and successors of enemy nationals on the basis of certain judgments made by the Supreme Court and the high courts.

To prevent the vested properties from falling into the hands of legal heirs of those who moved to other countries, the UPA government moved a similar ordinance in 2010, which it let lapse, because it could not replace it with an Act of parliament.

The present ordinance

The present ordinance was promulgated on January 7, 2016, for the first time. It was passed by the Lok Sabha on March 9, 2016. Subsequently, 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.

Thus the ordinance has been re-promulgated ostensibly in larger public interest and to safeguard the interest of the central government. According to reports, the president, while approving the re-promulgation has merely questioned why he is being asked to sign for the fifth time. He is also reported to have answered his own question by conveying to the government that he was aware of the continuous disruption of the winter session of parliament, during which little government business could be transacted.

As per the amendment proposed by the select committee, once an enemy property is vested in the custodian, it shall continue to be vested in him as enemy property irrespective of whether the enemy, enemy subject or enemy firm, has ceased to be an enemy due to reasons such as death, etc.

The Act allows transfer of enemy property from the enemy to other persons. The ordinance declares all such transfers as void.

The Bill prohibits civil courts from entertaining any disputes with regard to enemy property. It does not provide any alternative judicial remedy in terms of tribunals. The attorney general, Mukul Rohatgi, told the committee that it does not bar the jurisdiction of the high courts and the Supreme Court and therefore, it does not violate the basic structure of the constitution, which includes judicial review of laws made by the legislature.

The properties vested in the custodian of enemy property for India includes both moveable and immovable properties. The immovable properties are valued at more than Rs 1 lakh crore, while the movable property is valued at more than Rs 3,000 crore.

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 mesne profits by filing a suit, if so advised, the court had held. The court limited the custodian’s power to managing, preservation and control of the enemy property for a limited purpose and for a temporary period only.

The ordinance – seeking to change the basis of this judgment – asks if this violates Article 14 of the constitution.

It was submitted before the committee that all citizens who are legal heirs and successors of enemy or enemy subject or enemy firm are treated as a single class and it is the general right of this class that is sought to be altered by the Bill. The amendment, it was also suggested, bears a reasonable nexus with the object sought to be achieved, that is, to continue vesting enemy property in the custodian.

However, equally strong arguments were advanced by the Bill’s critics. It was stated that if the heirs of the enemy, whose property is vested with the custodian, become Indian citizens, they cannot be defined as ‘enemy’ of this country just because they were born to persons or inherited from those who belonged to some other nation with whom we have had a war in the past. Such a definition in the Bill, the committee was told, not only violates the constitution, but is abhorrent to our constitutional principles as well.

Need to uphold democratic principles 

What Rohatgi told the committee, however, is that once a property is declared as ‘enemy property’, it really vests in the government absolutely and the heir will not have recourse to the law of succession. He said, “Really speaking, it is not a case where thousands or millions of people have got rights”.

What Rohatgi appears to have forgotten is that in a democracy, the rights of a minuscule minority also matter and the constitution aims to protect their rights from being encroached by a majority.

The state of Bihar 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 our constitution.

The select committee, however, endorsed the Bill, after recommending some minor changes.

The committee’s report reveals that initially 2,100 enemy properties were identified. Now it has risen to 16,000 which casts doubt on the mechanism of identification of the enemy properties and its continued vesting in the custodian.

The crucial vesting period was 1962 to 1977, but the process of identification is still going on. A property in West Bengal was declared as enemy property as late as February 2016. There are 5,000 pending cases affecting more than 1,000 persons.

Six MPs, namely, K.C. Tyagi, K. Rahman Khan, D. Raja, P.L. Punia, Husain Dalwai and Javed Ali Khan disagreed with the committee’s report. In their view, the Bill violated basic principles of natural justice, human rights and settled principles of law. It adversely affects and results in punishing Indian citizens and will have no effect on any enemy government, they pointed out.

They found the principal Act a very balanced piece of legislation as it recognised that the enmity is not permanent and that Indian citizens should not be deprived of their rights including inheritance and succession. It draws attention to the declaration by the courts that vesting, under the 1968 Act, is temporary in nature and it is for the purpose of preservation, management and administration of properties. Their concerns appear to be valid.

The president could have at least waited for the Supreme Court’s constitution bench judgment in Krishna Kumar Singh v State of Bihar, which deals with a related question concerning propriety of a state government re-promulgating an ordinance, without placing it in the state legislature for its approval within the prescribed period.

The judgment, which could have a bearing on the repeated re-promulgation of ordinances by the Centre, is expected to be delivered before January 3, 2017, when the current Chief Justice of India, T.S.Thakur, retires.

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