1957 (1) TMI 45 - HC - Indian Laws

Summary

Issues Involved:
1. Validity and enforceability of the agreement dated 30th August 1952.
2. Jurisdiction of the Custodian under the Administration of Evacuee Property Act, 1950.
3. Impact of the Displaced Persons (Compensation and Rehabilitation) Act, 1954.
4. Plaintiffs' right to specific performance and injunction.
5. Constitutionality of Section 12 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954.
6. Bar of jurisdiction under Section 36 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954.

Detailed Analysis:

1. Validity and Enforceability of the Agreement Dated 30th August 1952:
The agreement was a composite one, consisting of three distinct matters: lease of mills and factory, sale of moveable properties, and sale of the mills and factory. The trial judge held that the agreement, despite being unregistered, did not affect the right to claim specific performance of the sale agreement. However, the Court noted that the agreement was indefinite in terms of price, period of enforceability, properties involved, and persons to whom the properties were to be sold. The price was to be determined by an expert appointed by the Government of India, which was not a party to the agreement. This indefinite nature made the agreement unenforceable.

2. Jurisdiction of the Custodian under the Administration of Evacuee Property Act, 1950:
The Custodian had the authority to cancel the lease under Section 12 of the Administration of Evacuee Property Act, 1950. The Supreme Court upheld this power, stating that the Custodian's authority extended to all leases involving evacuee property, not just those granted by the evacuee. The trial court's decision was partially overturned, confirming the Custodian's power to cancel the lease but not the other directions given.

3. Impact of the Displaced Persons (Compensation and Rehabilitation) Act, 1954:
The properties in question were acquired by the Government of India under Section 12 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954. This acquisition was for a public purpose and vested the properties in the Central Government free from all encumbrances. The plaintiffs' rights under the agreement were extinguished by this acquisition, and the properties became part of the compensation pool to be disposed of under Section 20 of the Act.

4. Plaintiffs' Right to Specific Performance and Injunction:
The Court held that the plaintiffs could not sustain their claim for an injunction based on the agreement, as it was unenforceable due to its indefinite nature. The agreement did not contain an implied negative covenant preventing the sale to others. Furthermore, the plaintiffs were not in possession of the properties at the time of the suit, and their right was merely a personal claim against the Custodian, which could not be enforced against the Central Government.

5. Constitutionality of Section 12 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954:
The Court rejected the argument that Section 12 was inconsistent with Article 31(2) of the Constitution. The Act did not acquire or take possession of the plaintiffs' property but imposed a restriction on their right to enforce the agreement against the Central Government. The plaintiffs' right to claim damages for breach of the agreement was not affected. Additionally, the Act was saved by Clause 5(b)(iii) of Article 31, which applies to legislation with respect to evacuee property.

6. Bar of Jurisdiction under Section 36 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954:
The Court agreed with the trial judge that the suit was barred under Section 36, which prevents the Civil Court from entertaining suits for injunctions in respect of actions taken under the Act. The Central Government and its authorities were empowered to dispose of the properties as part of the compensation pool, and no injunction could be granted to prohibit the sale.

Conclusion:
The appeal was dismissed, and the decree of the trial court was upheld. The plaintiffs' claims were found to be unenforceable, and the suit was barred under Section 36 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954. The Court also rejected the argument that the Act violated the equal protection clause of the Constitution.