1969 (2) TMI 183 - SC - Indian Laws

Summary

Issues Involved:
1. Interpretation of the notification of the Pakistan Government dated February 19, 1952.
2. Whether the joint Hindu family firm "Ghamandi Ram Gurbax Rai" was a 'body of individuals'.
3. Whether the amount in dispute had vested in the Custodian of Evacuee Property, Pakistan.
4. Whether the liability of the appellant to the respondent in India was extinguished due to the operation of the Pakistan Evacuee Property Ordinance.

Issue-wise Detailed Analysis:

1. Interpretation of the Notification of the Pakistan Government dated February 19, 1952:
The first question addressed was whether the joint Hindu family firm "Ghamandi Ram Gurbax Rai" fell within the definition of 'a body of individuals' as per the notification issued by the Pakistan Government on February 19, 1952. The notification exempted cash deposits made at banks by persons other than companies or associations or bodies of individuals from the operation of the Ordinance. The court examined the nature of the Hindu joint family under the Mitakshara School of Hindu Law, which holds property in collective ownership by coparceners in a quasi-corporate capacity. The court concluded that the Hindu joint family firm could not be treated as an 'individual' but must be considered 'a body of individuals whether incorporated or not' within the meaning of the notification.

2. Whether the Joint Hindu Family Firm "Ghamandi Ram Gurbax Rai" was a 'Body of Individuals':
The court analyzed the juristic nature of the Hindu joint family and its property ownership under the Mitakshara doctrine. It was determined that the joint family firm acted as a corporate body, holding property in trust for its members. This collective ownership and quasi-corporate nature led the court to conclude that the firm was indeed 'a body of individuals' and not an individual entity.

3. Whether the Amount in Dispute had Vested in the Custodian of Evacuee Property, Pakistan:
The court examined the provisions of the Pakistan (Administration of Evacuee Property) Ordinance, 1949, and the subsequent amendments. According to Section 6 of the Ordinance, all evacuee property was deemed to have vested in the Custodian with effect from March 1, 1947. The court found that the amount in dispute, being a cash deposit in the bank, fell within the definition of evacuee property as per the amended Ordinance. Consequently, the amount had vested in the Custodian, divesting the joint Hindu family firm of its interest therein.

4. Whether the Liability of the Appellant to the Respondent in India was Extinguished:
The court considered the rule of Private International Law regarding involuntary assignment of debts. It referenced English case law, such as Arab Bank Ltd. v. Barclays Bank, which held that the situs of a debt determines its transfer under legislation. The court applied this principle, concluding that the liability of the appellant bank to the respondent in India was extinguished due to the vesting of the amount in the Custodian of Evacuee Property in Pakistan. The court reasoned that the appellant had garnishable assets in Pakistan, which the Pakistan Government could realize.

Conclusion:
The Supreme Court allowed the appeal, set aside the judgment of the Punjab High Court, and restored the Tribunal's decision dismissing the respondent's claim. The court held that the joint Hindu family firm was a 'body of individuals' and that the amount in dispute had vested in the Custodian of Evacuee Property, thereby extinguishing the appellant's liability to the respondent in India. Each party was directed to bear its own costs in the High Court, with the appellant paying the respondent's costs in the Supreme Court as previously directed.