Enemy Property (Amendment and Validation) Ordinance, 2016

The Enemy Property (Amendment and Validation) Third Ordinance was promulgated by President of India on May 31, 2016. It proposes to amend the Enemy Property Act, 1968 and the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. Previously two similar Ordinances had been promulgated in January 2016 and April 2016. But both lapsed because they were not approved by the parliament within six weeks from reassembly of the parliament. Ordinances are promulgated by President under Article 123 of the constitution. The proposed amendments in the parent Act seeks to deal with the loopholes in the existing law.

Background on Enemy Property Act, 1968

The Enemy Property Act, 1968 is related to the properties that were left behind by those who migrated to Pakistan at the time of Independence and after. The government enacted this act to get control of such properties spread in various states (maximum Uttar Pradesh). The act barred the Indian citizens who claimed to be the legal and rightful heirs of the original owners from inheriting those properties. This act designated these properties as Enemy Properties and gave blanket powers to central government to take over properties owned by people who left for Pakistan or China when India was at war with these countries.

The act authorizes the Central Government to appoint a custodian for enemy property for India and one or more deputy/assistant custodians as assistances. All enemy properties in the country are within the control of this  Custodian of Enemy Property for India based in Mumbai.

Why need for amendments?

The statement of objects and reasons in the Bill mentioned this:

“Of late, there have been various judgments by various courts that have adversely affected the powers of the Custodian and the Government of India as provided under the Enemy Property Act, 1968. In view of such interpretation by various courts, the Custodian is finding it difficult to sustain his actions under the Enemy Property Act, 1968.”

It’s worth recall here that in 2005, a Supreme Court ruling had watered down the Custodian’s powers. One such court judgment was passed in the case of the estate of the erstwhile Raja of Mahmudabad, who owned several large properties in Hazratganj, Sitapur and Nainital. Following partition, the Raja left for Iraq and stayed there for some years before settling in London. After The Enemy Property Act was enacted in the year 1968 by the Government of India, the Raja’s estate was declared enemy property. Subsequently, his son Mohammed Amir Khan took the legal recourse and after nearly 30 years, the  Supreme Court in 2005 asked the authorities to return properties worth several thousand crores to the erstwhile Raja of Mahmudabad. Soon after, there were more litigants who queued up to get back their properties. To ensure that the enemy property continues to vest in the Custodian, appropriate amendments were brought in by way of an Ordinance in the Enemy Property Act, 1968 by the then Government in 2010. This ordinance restrained courts from ordering the government to divest enemy properties from the Custodian. This made the 2005 SC order ineffective, and the Custodian again took over the Raja’s properties. However, the ordinance lapsed in September 2010 and later introduced bill was also lapsed because of completion of term of Lok Sabha.

The amendments will help in plugging the loopholes in the Act to ensure that the enemy properties that have been vested in the Custodian remain so and they do not revert back to the enemy subject or enemy firm.

Value of enemy properties

In all, there are nearly 16,000 properties across the country that have either been or are being taken over by the CEP under the 1968 Act. Of these, the process to take over 9,400 properties which are estimated to be worth Rs 1 lakh crore has been successfully completed. Process to take over rest of the property has been initiated.

What can be done with enemy properties?

It is estimated by experts that around 599 highways projects can be sanctioned and completed with this money. Alternatively, it can fund entire Digital India campaign.

How did the enemy countries treat the properties?

Pakistan had taken over the properties of Indians and had sold them. In the Tashkent Declaration (signed in 1966), a clause was included to discuss the return of the assets and property taken over by either side in connection with the conflict. However, Pakistan Government had disposed of all such enemy properties in their country in 1971. Bangladesh is returning all such properties to their original owners.

Provisions of the Ordinance

The main objective of the amendments is to guard against claims of succession or transfer of properties left by people who migrated to Pakistan and China after the wars.

Main amendments to the 1968 Act are discussed as follows:

Retrospective effect

The Ordinance amends several provisions of the 1968 Act retrospectively. The ordinance nullifies all deals to transfer properties since 1968 and stipulates that once an enemy property is vested in the Custodian, it won’t matter if the legal heir is an Indian citizen or not. As a result, divestments and transfers of enemy property that had taken place before the promulgation of the Ordinance, which are not in compliance with the Ordinance, will be considered void.

Vesting of enemy property

The 1968 Act allowed for the vesting of these properties with the Custodian, after the conflicts with Pakistan and China. The Ordinance amends the Act to clarify that even in the following cases these properties will continue to vest with the Custodian:

• the enemy’s death;
• if the legal heir is an Indian or citizen of a country that is not an enemy,
• enemy changes his nationality to that of another country, etc. The Ordinance further provides that vesting of enemy property with the Custodian will mean that all rights, titles and interests in the property will vest with the Custodian. No laws and customs governing succession will be applicable to these properties

Divestment

Divestment means returning of property from the Custodian to the owner or other person. The 1968 Act had a provision which stated that the central government may order for an enemy property to be divested from the Custodian and returned to the owner or other person. The Ordinance replaces this provision, according to which enemy properties are allowed to be returned to the owner only if an aggrieved person applies to the government, and the property is found not to be an enemy property.

Power of sale

The 1968 Act permitted sale of enemy property by the Custodian only if it was in the interest of preserving the property, or to secure maintenance of the enemy or his family in India. The Ordinance further expands this power, and states that the Custodian may sell or dispose of enemy property within a time period specified by the central government, irrespective of any court judgements to the contrary.

Transfers by enemies

The 1968 Act prohibited transfer of enemy property by an enemy if:

• it was against public interest, or
• to evade vesting of property in the Custodian. The Ordinance removes this provision, and prohibits all transfers by enemies. Further, it renders transfers that had taken place before or after the commencement of the 1968 Act as void.

Prohibition of jurisdiction

The Ordinance prohibits civil courts and other authorities from entertaining cases against enemy properties, or against actions of the central government or the Custodian under the Act.

Powers of the Custodian

The 1968 Act vested the power in the Custodian to take measures to preserve enemy property, and maintain the enemy and his family if they are in India, from the income derived from the property. The Ordinance removes the duty of the custodian to maintain the enemy and his family. Further, the Act permitted the Custodian to carry out some measures such as selling, mortgaging or leasing enemy property.

The Ordinance adds to the list of permissible measures:

• fixing and collecting rent, license fee, etc. from enemy property, and
• evicting unauthorised occupants and removing unauthorised construction from such properties.

Amendment to the Public Premises Act, 1971

• The Public Premises Act, 1971 regulates the removal of unauthorised occupants and construction from public premises. The Ordinance amends this Act to include enemy properties within the definition of public premises.
• The definition of “enemy” and “enemy subject” includes the legal heir and successor of an enemy, whether a citizen of India or a citizen of a country which is not an enemy, and also include the succeeding firm of an enemy firm in the definition of “enemy firm” irrespective of the nationality of its members or partners.
• The law of succession does not apply to enemy property. Henceforth there cannot be transfer of any property vested in the custodian by an enemy till it is disposed of in accordance with the provisions of the Act.

Criticism

The above amendments will help in plugging the loopholes in the Act to ensure that the enemy properties that have been vested in the Custodian remain so and they do not revert back to the enemy subject or enemy firm. Critics label the amendments as “anti-minority” as it affects mainly the properties of those who went to Pakistan and who are mainly Muslims. It should be noted that there are not too many Chinese properties at stake. Section 18B of the Bill states that no civil court or other authority shall entertain any suit or other proceeding in respect of any enemy property. This provision is severely criticised because it curtails the option of legal recourse.