RAJ BAHADUR KANWAR RAJ NATH AND OTHERS vs. PRAMOD C. BHATT, CUSTODIAN OF EVACUEE PROPERTY.

Case Analysis

RAJ BAHADUR KANWAR RAJ NATH AND OTHERS vs. PRAMOD C. BHATT, CUSTODIAN OF EVACUEE PROPERTY.

April 22, 2025

A) ABSTRACT / HEADNOTE

The Supreme Court in Raj Bahadur Kanwar Raj Nath and Others v. Pramod C. Bhatt, Custodian of Evacuee Property (1955) 2 SCR 977 examined the wide discretionary powers of the Custodian under Section 12(1) of the Administration of Evacuee Property Act, 1950, especially in the context of cancelling leases granted by himself and not just by evacuees. The appellants, who were displaced persons, had entered into a composite agreement with the Custodian for lease, purchase of movable property, and an agreement to purchase evacuee property in future. Upon alleged breach of lease conditions, the Custodian issued a notice for cancellation under Section 12, which the appellants contested on jurisdictional grounds. The core legal issue revolved around whether the Custodian could invoke Section 12 to cancel leases executed by himself. The Supreme Court upheld the Custodian’s authority, emphasizing that the operative clause under Section 12 was unqualified and absolute, further clarified through a retrospective amendment. This case set a significant precedent on interpreting non-obstante clauses, reaffirming the supremacy of administrative power in statutory contexts and its interplay with contractual obligations.

Keywords: Evacuee Property, Lease Cancellation, Custodian Powers, Section 12(1), Administration of Evacuee Property Act, Non-obstante Clause, Supreme Court of India, 1955 Judgments, Legal Interpretation, Displaced Persons

B) CASE DETAILS

i) Judgement Cause Title: Raj Bahadur Kanwar Raj Nath and Others v. Pramod C. Bhatt, Custodian of Evacuee Property

ii) Case Number: Civil Appeal No. 205 of 1954

iii) Judgement Date: 10 November 1955

iv) Court: Supreme Court of India

v) Quorum: B.K. Mukherjea C.J., Venkatarama Ayyar J., and Jafer Imam J.

vi) Author: Justice Venkatarama Ayyar

vii) Citation: (1955) 2 SCR 977

viii) Legal Provisions Involved: Section 12(1) and Section 10 of the Administration of Evacuee Property Act, 1950, as amended by Act XLII of 1954

ix) Judgments overruled by the Case (if any): None specifically overruled, but the High Court’s view limiting Section 12 to evacuee-executed leases was reversed.

x) Case is Related to which Law Subjects: Constitutional Law, Property Law, Administrative Law, Statutory Interpretation

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The aftermath of Partition led to mass migration and abandonment of property. The Indian legislature enacted the Administration of Evacuee Property Act, 1950, to regulate these properties. Under this framework, the Custodian assumed control and management of assets left behind by evacuees. In this case, the Custodian entered into a lease and composite agreement with displaced persons, allowing them to operate mills and factories. On alleged breaches, the Custodian issued a show-cause notice under Section 12(1). The appellants contested this power, arguing that the Custodian could not cancel leases he himself granted. The Bombay High Court ruled partially in favour of the appellants. On appeal, the Supreme Court delivered a seminal ruling clarifying the Custodian’s powers and scope of administrative discretion under the Act, particularly in light of a retrospective legislative amendment.

D) FACTS OF THE CASE

Messrs Abdul Karim and Brothers, the evacuees, owned mills and other properties which became evacuee property upon their migration to Pakistan. These were formally declared as such under Section 7 of the Act and vested in the Custodian under Section 8(1). The appellants, being displaced persons, entered into a composite agreement with the Custodian on 10 August 1952. The agreement included three core elements: (1) a five-year lease of mills and a factory, (2) a sale of movables like stock, spare parts, and vehicles, and (3) an agreement to sell the property outright in future, subject to conditions.

The appellants took possession and began operations. On 12 February 1954, the Custodian served a notice alleging breaches of lease terms and proposing cancellation under Section 12. The appellants challenged the notice via a writ petition under Article 226 in the Bombay High Court, arguing the Custodian lacked power to cancel a lease he had executed himself. The writ also questioned his authority under Section 10, as the movables were no longer evacuee property following their sale.

E) LEGAL ISSUES RAISED

i) Whether the Custodian has the power under Section 12(1) of the Administration of Evacuee Property Act to cancel a lease executed by himself?

ii) Whether the Custodian had authority under Section 10 to issue directions concerning the movable property already sold to the appellants?

F) PETITIONER/APPELLANT’S ARGUMENTS

i) The counsels for Petitioner / Appellant submitted that

The power under Section 12(1) extended only to leases originally granted by the evacuee and not those entered into by the Custodian himself. They emphasized the non-obstante clause—“notwithstanding anything contained in any other law for the time being in force”—arguing it allowed only legislative overrides, not contractual breaches.

They asserted the composite nature of Exhibit A, which included contractual terms outside the statute’s purview. The agreement involved not just a lease but a sale and a conditional future sale. Therefore, action under Section 12 could not affect the entire document. Relying on private law contract principles, they contended that statutory authority cannot override mutual consent agreements in the absence of express power.

The appellants also argued that movable property, once sold, ceased to be evacuee property. Hence, Section 10, applicable only to “evacuee property,” could not be invoked for regulating the same.

They referred to Aswini Kumar Ghosh v. Arabinda Bose [(1953) SCR 1] and Dominion of India v. Shrinbai A. Irani [(1955) 1 SCR 206] to argue that non-obstante clauses must be narrowly interpreted and cannot expand the scope of the substantive provision beyond its language[1].

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that

The Custodian has absolute powers under Section 12(1) to cancel any allotment or lease relating to evacuee property, whether created before or after the enactment. They pointed to the retrospective amendment by Act XLII of 1954, which clarified that the term “lease” includes those granted by the Custodian himself. This amendment confirmed that the power under Section 12 had always applied to such leases.

Further, the non-obstante clause did not limit the substantive powers but merely overrode conflicting laws. It served to ensure administrative supremacy in managing evacuee assets, preventing lessees from claiming immunity based on any statutory rights.

The respondent also asserted that Section 10 allowed custodial intervention for the preservation of evacuee property, which extended to ensuring that movables, evenif sold, were safeguarded pending disputes or payment completion.

H) RELATED LEGAL PROVISIONS

i) Section 12(1) of the Administration of Evacuee Property Act, 1950 – grants the Custodian authority to cancel leases or agreements related to evacuee property “notwithstanding anything contained in any other law.”

ii) Section 10 – authorizes the Custodian to issue directions for preservation, management, and control of evacuee property.

iii) Retrospective Amendment by Act XLII of 1954 – inserted an explanation to Section 12 stating that lease includes leases granted by the Custodian and applies retrospectively.

H) JUDGEMENT

a. RATIO DECIDENDI

i) The Supreme Court held that the Custodian’s power under Section 12(1) is absolute and unqualified. The retrospective amendment clarified legislative intent and resolved ambiguity. The Court rejected the appellants’ interpretation of the non-obstante clause, clarifying that such clauses do not limit the operative provision but enhance its reach in overriding inconsistent statutory rights.

The Custodian could thus cancel even those leases that he himself executed, especially when the underlying property was evacuee property.

The Court reiterated that the interpretation must prioritize the object and purpose of the statute—namely, efficient administration and control of evacuee assets, which included decisive power to reverse misuse or breach.

b. OBITER DICTA

i) The Court remarked that the non-obstante clause is often inserted ex abundanti cautela—out of abundant caution—to avoid potential legal challenges based on other statutes. However, it cannot be used to narrow the main operative power conferred by the legislation[2].

c. GUIDELINES

Section 12(1) of the Act applies to all leases—whether granted by the evacuee or Custodian.
The Custodian has discretion to cancel leases where lessees violate conditions, without judicial interference.
The retrospective amendment validates all past actions taken under Section 12 concerning Custodian-executed leases.
Non-obstante clauses must be harmonized with the operative provision and cannot restrict administrative authority.
Contractual terms in composite agreements cannot restrict statutory powers under the Act.

I) CONCLUSION & COMMENTS

The Supreme Court’s judgment in Raj Bahadur Kanwar Raj Nath v. Pramod C. Bhatt reaffirmed the paramountcy of administrative authority under the Evacuee Property framework. The ruling harmonized statutory power with retrospective legislative intent, ensuring that evacuee property is managed free from private encumbrance or conflicting legal interpretations. It struck a balance between administrative exigency and contractual sanctity, favouring the former when statutory objectives demand so. The verdict strengthened administrative jurisprudence and emphasized the broad interpretive scope of public interest legislation in post-Partition India.

J) REFERENCES

a. Important Cases Referred

[1] Aswini Kumar Ghosh v. Arabinda Bose, (1953) SCR 1, pp. 21, 24
[2] Dominion of India v. Shrinbai A. Irani, (1955) 1 SCR 206, p. 213

b. Important Statutes Referred