P L D 1962 Supreme Court 284 (PLP)

S. A. RAHMAN, J.‑

This appeal, by special leave, raises the question of the true interpretation of section 4 of the Displaced Persons (Land Settlement) Act, 1958 (hereinafter referred to as the Act). It has arisen In the following circumstances. The appellants are mortgagees with possession of certain agricultural lands which belonged to non‑Muslims who are now evacuees. The mortgage was created in 1938. Certain Khasra numbers out of the mortgaged lands were allotted to the second respondent, Shamsul Haq, by the Rehabilitation authorities, after a notification had been issued under section 4 of the Act for acquisition of the "land" in question. As the allottees pressed the appellants or their tenants for a share in the batai of the land and were in fact threatening their ejectment there from, the appellants moved the High Court of West Pakistan for an appropriate writ to safeguard their rights in the property. They claimed that, by the notification of acquisition, the mortgagees' interest had not been extinguished and that the allotment of the land by the Rehabilitation authorities was incompetent. A learned single Judge of the High Court dismissed the writ petition as he felt bound by a decision, on a similar point, by a Division Bench of the same High Court. It had been held in that case that the notification of acquisition put an end to all mortgages and the property vested, free from all encumbrances, in the Central Government. A Letters Patent appeal from the decision of the learned single Judge also failed in the High Court. Special leave to appeal was granted to consider the points of law raised in this case. The main point for consideration Is as to the legal effect of a notification issued under section 4 of the Act. This section is in the following terms :‑ "

4. Power to acquire land.‑(1) The Central Government may, for any of the purposes of this Act, by notification in the Official Gazette, acquire any land within the Federal Capital. (2) As and when so required by the Central Government, the Government of West Pakistan shall, for any of the purposes of this Act, by notification in the Official Gazette acquire such land situated in the Province (excluding the Federal Capital as the Central Government may deem it necessary to acquire. (3) On the publication of a notification under subsection or subsection (2), the right, title and interest of any evacuee or persons claiming through him in the land specified In the notification shall, with effect from the date of such publication, be extinguished and the land shall vest wholly and absolutely In the Central Government free from all encumbrances. (4) The Central Government shall prescribe the cases or class of cases in which, and the period within which any charge created by a Custodian on any land acquired under sub section (1) or subsection (2), or any decree granted by a civil or revenue Court against such land, shall be satisfied or such compensation as is determined by the High Court under sub section (3) of section 43‑A of the Pakistan (Administration of Evacuee Property) Act, 1957 (XII of 1957), shall be paid, and the manner in which it shall be satisfied or paid. (5) Notifications under subsection (1) and subsection (2) may be issued from time to time and may relate to‑ (a) all land generally ; or (b) any class of land ; or (c) all land situated in a specified area ; or (d) any particular land." The word "land", as occurring in this section, has to be under stood In the sense of the definition of that term contained in cl. (3) of section 2 of the Act. This reads as follows :‑ "(3) `land' means evacuee property consisting of land, held for agricultural purposes or for purposes subservient to agricul ture or for pasture, including gardens, un surveyed land and trees or buildings and other structures standing thereon and includes all rights of evacuees in such land, but does not Include‑ (a) property as defined in sub‑clause (b) of clause (2) of section 2 of the Registration of Claims (Displaced Persons) Act, 1956 (III of 1956) ; or in sub‑clause (d) thereof ; or (b) such evacuee land as may be declared by the Chief Settle ment Commissioner as a building site ;" It is common ground that the lands in question do not fall within the exceptional sup‑clauses (a) and (b) of the definition of "land" reproduced above. The expression "evacuee property" occurring therein, is not defined in the Act and to determine the exact signification of that expression we must have recourse to clause (3) of section 2 of the Pakistan (Administration of Evacuee Property) Act, 1957. "Evacuee Property" is defined in that enact ment as follows :‑ "(3) `evacuee property' means any property in which an evacuee has any right or interest (whether personally or as a trustee or a beneficiary or in any other capacity), and includes‑ (a) any right or interest In joint Hindu family property which would accrue to the evacuee upon the partition of the same; or (b) property of an evacuee obtained by transfer on or after the first day of March 1947, until the transfer is confirmed by the Custodian ; but does not include‑ (i) any ornaments or wearing apparel or any cooking vessels or other household effects in the immediate possession of an evacuee; or (ii) any property belonging to a joint stock company the registered office of which was situated, before the fifteenth day of August 1947, in any place in the territories now comprising India and continues to be so situated after the said date ;" The whole case turns on the correct construction of the words "property in which an evacuee has any right or Interest" in this definition. On behalf of the appellants, it is contended that evacuee property is confined to whatever rights or interest an evacuee has in any property, situated in West Pakistan. On the other hand, it is suggested by the learned Advocate‑General, on behalf of the Chief Settlement and Rehabilitation Commissioner, as well as by learned counsel on behalf of the other respondents that this term should receive a wider interpretation and any property situate in West Pakistan in which an evacuee may have any right or interest, should be regarded, as a whole, as evacuee property. In the course of the argument as it developed, however, learned counsel for the respondents found it difficult to sustain this proposition to its logical limits and had to concede that it might lead to anomalous results. The Pakistan (Administration of Evacuee Property) Act, 1957, was enacted expressly to provide for the administration of evacuee property in Pakistan and for certain matters incidental thereto, as has been declared in the preamble to that Act. The statement of Objects and Reasons that accompanied that Act, also made it clear that the underlying intention was to make legal provision for the administration and management of such properties as had been left by migrants to India, in West Pakistan. A consideration of the scheme of this Act lends support to the narrower, rather than the wider, interpretation of "evacuee property" in this Act. Section 7 of this Act declares that all evacuee property shall vest and shall be deemed always to have vested in the Custodian, with effect from the first day of March 1947. Section 13 enables the Custodian to take over management of that property, part of which is evacuee property, provided that the value of the evacuee part exceeds 50% of the total value of the property. If the wider definition of "evacuee property" were to prevail, this provi sion would become wholly redundant. Again, section 22 of that Act authorises a person, claiming any right or interest in any property treated by the Custodian or Rehabilitation .Authority as evacuee property, to ask for a declaration from the Custodian that the property is not evacuee property, or that his interest in the property has not been affected by the provisions of this Act. This section clearly envisages, therefore, the possibility of the existence of properties of a composite nature, on which some interest may belong to the evacuee or evacuees and the remaining interest may vest in a non‑evacuee. It would, therefore, be inapt to describe such properties as "evacuee property" in their entirety, without qualification. This would be consistent with the position adopted by the appellants that their mortgagee‑rights with posses sion, in the property in dispute, were not "evacuee property" and, to that extent, the lands in question would be taken out of the purview of that term. Only the equity of redemption was owned by the evacuees and the "evacuee property" in the context of the instant case would be confined to that interest. Section 23 of the Act, which enables restoration of evacuee property to be made, under certain conditions, to an evacuee or to his heir, clearly could not be construed to mean that "evacuee property", within the meaning of the extended definition contended for by the respondents, would be restored to such a person, to the prejudice of Pakistan citizens, owning some interest therein. It would thus appear that the narrower definition is more consistent with the aims and objects of this legislation. It is, however, contended that the view sponsored by the appellants, would make the concluding portion of subsection (3) of section 4 of the Act completely nugatory. It is emphasized that on the publication of a notification under subsection (1) or subsection (2) of section 4, not only the right, title or interest of any evacuee or persons claiming through him, in the land specified in. the notification, is deemed to have been extinguished, with effect from the date of such publication, but that the land would `'vest wholly and absolutely in the Central Government free from all encumbrances." It is forcibly argued that "encumbrances" would include mortgages as well and that consequently, the legis lature must have contemplated the extinction of all mortgages standing on any evacuee lands, after the publication of the relevant notification, under this section. It is difficult to accede to this contention as correct. The intention to destroy the right. of Pakistani owners in properties, in which part of the interest E vested in an evacuee, without any compensation whatsoever, cannot be lightly attributed to the legislature. Subsection (4) of section 4 of the Act only authorizes the prescription of cases, or class of cases in which, and the period within which, "any charge created by a Custodian on lands acquired under sub sections (1) or (2) of this section, or any decree granted by a civil or revenue Court against such land. shall be satisfied or such compensation as is determined by the High Court under sub section (3) of section 43‑A of the Pakistan (Administration of Evacuee Property) Act, 1957, shall be paid." These categories do not include cases of mortgages which had not formed the subject‑matter of a Court decree. The rules framed under the Act to provide for such compensation, known as "the Satisfaction of Charges (Land Settlement) Rules, 1962", also conform to sub section (4) of section 4 of the Act in so far as provision for compensation is made only for the benefit of charge‑holders." A "charge" is by definition limited in the rules, to such categories as are mentioned in subsection (4) of section 4 of the Act. The inference would seem to be that the Legislature had not included mortgagees, as persons entitled to compensation under these provisions, as there was no possibility of their rights being acquired under a notification of the type under consideration in this case. The contrary view would lead to the absurd position that the interest of a Pakistani owner in any property, in which an evacuee owns any right or interest, however tenuous (e.g. a right of easement, or rights under a simple mortgage securing a trifling sum over a property of considerable value or a leasehold right for a short period) would also be taken over by Government without any legal obligation to compensate the Pakistani owners of substantial interests in the property. The words "shall vest wholly and absolutely in the Central Government free from all encumbrances" appear to have been added to subsection (3) of section 4 of the Act, merely by way of abundant caution and the intention really seems to have been to provide that whatever right, title or interest was possessed by the evacuee owner in the property which is the subject of a notification, would stand extinguished with its publication. Such a construc tion would lead to no anomaly or absurdity. If the choice lies between two interpretations one of which clearly leads to the result that the Pakistani owners' interests had been confiscated without compensation and the other which leaves those rights intact, the adoption of the latter alternative would, in all probability, be in accord with the legislative intent. The view is also fortified by a consideration of the fact that the Central Government itself appears to have been interpreting these provisions in the narrower sense. The Displaced Persons (Land Settlement) Rules, 1959, make it clear that permanent settle ment of lands has to be made only to the extent of the right or interest abandoned by an evacuee therein. The Rehabilitation id Scheme of 1952, framed under section 7 (1) of the Pakistan Rehabilitation Ordinance XIX of 1948, as amended from time to time, also contains an exemption in favour of lands mortgaged by evacuees in favour of Muslims resident in Pakistan (Cl. 4‑A). This very scheme was adopted in toto under section 14 of the Act and it was not till the 17th of February 1961, that Para. 4‑A (ii) of the Scheme was deleted, which bears on this exemption. It may be mentioned that the acquisition notification in the present case was issued long before this amendment, on the 8th of June 1960, so that the amendment does not affect the position in the instant case. There was a letter, issued by a Deputy Secretary to the Government of Pakistan, Ministry of Rehabilitation, on the 27th of November !959, to the Chief Settlement and Rehabilita tion Commissioner, vide p. 65 et seq of the record, which inter alia recognizes that mortgagees could not be compelled to surrender the lands in their possession without redeeming the mortgages. It was suggested therein that negotiations may be started with them by offering them compensation for parting with their rights but that if they declined to come to terms, Government could always acquire the lands in question under the Land Acquisition Act. The departmental construction, therefore, of the relevant provision until recently, has always been in favour of the contention raised by the appellants. An alternative argument was advanced, on behalf of the respondents, to the effect that since the property In question was allotted to the respondents, it was the duty of the appellants to approach the Custodian for a declaration under section 22 of the Pakistan (Administration of Evacuee Property) Act, 1957, for safeguarding their rights. Such a declaration, it was suggested, would be equivalent to the creation of a charge by the Custodian, within the meaning of subsection (4) of section 4 of the Act. This argument will not stand a moment's scrutiny. A declaration granted by the Custodian under section 22 of the relevant Act would only recognise an existing mortgage but could not be said to have created a new charge. A Custodian is authorized under section 25 of Act XII of 1957, to create a charge on evacuee F property. There were corresponding provisions in the predecessors of that Act. That Act, itself distinguishes between the creation of such a charge and the declaration of an existing charge or mortgage under section 22 thereof. The argument consequently seems to be entirely devoid of force. The position that emerges, therefore, is that the right, title and interest of the appellants has not been acquired by the notification B issued under section 4 of the Act and unless the appellants' mortgage is redeemed either by the Government or by the allotees, the appellants are entitled to retain possession of the lands under their mortgage. The appeal is, consequently, allowed and a direction issued to the respondents, prohibiting them from dispossessing the appellants of the property in dispute until the mortgage in their favour is redeemed by due process of law. In view of the difficult nature of the questions involved, the parties are left to bear their own costs. A.H. Appeal allowed.