By Tanishka Tiwari

Published on: October 28, 2023 at 11:15 IST

Enemy property refers to property left behind in India by those who obtained Pakistani or Chinese citizenship. To govern such holdings, the Enemy Property Act was enacted in 1968 during the 1965 war with Pakistan. The same was done for property left behind by those who fled to China following the Sino-Indian war in 1962. The ownership of these properties was transferred to a government department in India called the Custodian for Enemy Property. A few clauses of the original act were altered by the Enemy Property (Amendment and Validation) Act, 2016.

Following the Indo-Pak wars of 1965 and 1971, there was mass migration from India to Pakistan. By exercising their rights under the Defence of India Rules enacted under the Defence of India Act, the Government of India took possession of the properties and businesses managed by people who accepted Pakistani nationality. These are referred to as ‘enemy properties’ under the Act. The Central Government also entrusted such goods to the Custodian of Enemy Property for India.

The Government of India established the Enemy Property Act (hereafter referred to as the Act) in 1968, which stipulated that enemy property vesting with the custodian would continue to do so. The enemy property stretched over numerous Indian states, as did the custodian’s jurisdiction over those properties. Such hostile properties included both immovable and moveable properties. The Custodian of Enemy Property Office is based in Mumbai, with a branch office in Calcutta.

The Enemy Properties Act, 1968: A Brief Overview

The Enemy Property Act, 1968 is a piece of legislation rooted deep in India’s turbulent history. The act’s fundamental concern is the question of property left behind by those who relocated to hostile countries during times of conflict.

The statute gives the government the authority to seize properties in India that belonged to anyone who went to countries designated “enemies” of India. The major goal was to ensure that such properties do not endanger India’s security and are administered in the best interests of the country.

The context of the Enemy Property statute is as fascinating as the statute itself. The seeds of this legislation were sown during India’s partition in 1947.

A significant population exchange occurred when India was partitioned into two independent nations, India and Pakistan. Millions of people crossed borders in search of a new home, leaving behind not only memories but also actual possessions such as land, houses, and enterprises.

The early aftermath of the division was characterised by turmoil, uncertainty, and, sadly, violence. Property left behind by persons who migrated became a major worry in this environment. There was a need to efficiently manage these properties, ensuring they avoided falling into disuse or becoming a source of controversy. As a result, the government saw the necessity for an organised way to deal with such properties, which led to the drafting of this Act.

Before delving into the Act’s roots, it’s critical to grasp the pre-independence context. A set of laws and acts governed every element of Indian society during the British colonial reign in India. Property rights were no different. The British had created a strong legal framework that governed how property might be acquired, transferred, and inherited.

However, when the winds of change began to blow and the cry for independence got louder, the issue of property rights for people who might choose to leave India after independence became a point of contention. The leadership of the time was fully aware that the imminent independence would result in migration, and there was a need to address the issue of possessions that would be left behind in advance.

Warfare was the true litmus test for the newly independent India. The wars with China in 1962 and with Pakistan in 1965 and 1971 posed fresh obstacles. Citizens of India who moved to these “enemy” countries during or after the wars left behind property that needed to be managed. The government faced a dual challenge: ensuring that these holdings were not misappropriated and that they were used for the benefit of the nation.

The battles highlighted the importance of a more complete and resilient approach to dealing with hostile attributes. The Act was conceived of and eventually enacted in this setting. The legislation established a legal framework for the government to manage and control the properties of those who had relocated to hostile countries, ensuring that India’s security and interests were always prioritised.

Features of the Act:

• “Enemy Property” refers to any property owned, held, or managed on behalf of an enemy, an enemy subject, or an enemy firm. In the context of the legislation, the term “enemy” refers to any country that commits an act of aggression against India. As a result, properties left behind by those who moved to such nations during or after wars are referred to as “enemy properties.”¹
• The statute creates the position of “Custodian,” a Central Government-designated official. The Custodian’s principal task is to appropriate and manage enemy properties. This involves ensuring that the property is well-maintained, that any money generated by the property is collected, and that any encumbrances or liabilities associated with the property are properly handled. The Custodian works as a custodian of these properties, ensuring that they are not abused or neglected.²
• One of the act’s most important sections is the prohibition on the transfer and sale of enemy property. No enemy property may be sold, transferred, or mortgaged without the Custodian’s prior authority. This provision ensures that the properties stay under government control and are not subject to unauthorised sales or transfers.
• The act has particular provisions about legal heirs’ rights. While the property may be referred to as “enemy property,” legal heirs’ rights, particularly those resident in India, are preserved. However, it is important to emphasise that, while legal heirs may claim the property, the final decision is made by the government, with the wider national interest in mind.

The act has been chastised for potentially infringing on human rights. Many claim that the descendants of individuals who migrated, particularly those with no ties to “enemy” countries, are unfairly punished. They are facing the loss of ancestral properties as a result of actions made by their predecessors over which they had no influence.

Furthermore, the Custodian’s vast powers, particularly following the 2017 revisions, have generated concerns about potential abuse and the lack of an effective redressal procedure for impacted families.

The act has enormous economic consequences. With the government seizing ownership of enormous swaths of land and property, the original owners and their successors may lose earnings. Furthermore, if these assets are not efficiently utilised or monetized, they can become economic liabilities.

On the other hand, the government has the option of using these properties for public benefit or monetizing them to stimulate the economy. The ethical quandary of benefitting from such properties, however, remains.

According to sources, the entire value of enemy goods under the Custodian’s possession is expected to be more than Rs 1 lakh crore (more than $15 billion). The Raja of Mahmudabad estate in Uttar Pradesh, valued at over Rs 120 crore, and the Hyderi Manzil property in Mumbai, leased by the Custodian for over Rs 200 crore, are two major monetized enemy estates.

The government has been able to obtain significant cash from these seized properties through the Custodian. These properties have contributed to the government’s coffers, whether through rent, lease, or sale. Exact statistics differ, but estimates place the worth of these properties in the thousands of crores.

The government has been able to obtain significant cash from these seized properties through the Custodian. These properties have contributed to the government’s coffers, whether through rent, lease, or sale. Exact statistics differ, but estimates place the worth of these properties in the thousands of crores.

The impact of the Enemy Property Act on the real estate market has been mixed. The government’s authority to lease or sell these properties has brought valuable real estate to the market, perhaps spurring development and expansion in particular locations.

It has resulted in stagnation in locations where the Custodian holds huge swaths of land or substantial properties. Because these properties are frequently not developed or maintained, they might reduce the value of neighbouring homes.

While there is no doubt that maintaining and monetizing these properties has economic benefits, there are serious ethical concerns: The proceeds can be used for public welfare, infrastructure development, and other national initiatives.

The act of seizing and monetizing family properties with significant emotional and ancestral importance poses ethical concerns. Is it appropriate for the government to profit from such assets? Where should the border between national interest and individual rights be drawn?

The Act has had a subtle but substantial impact on India-China ties. Because of their Chinese connections, numerous properties were classified as “enemy properties” during the 1962 Indo-China War.

In essence, the statute designates countries as “enemies,” which can strain diplomatic relations. The expropriation of assets owned by Chinese nationals or people of Chinese heritage in India following the 1962 conflict was a source of disagreement between the two countries.

While the statute is primarily concerned with real estate, the underlying message can have an impact on trade and investment. The designation of a country as an “enemy” can dissuade potential investors or firms from entering that country, since they may fear similar acts in the future.

Given the act’s historical setting, its most significant influence has been on India’s relations with Pakistan.

The act was a direct result of partition and subsequent emigration. The widespread seizure of the belongings of people who went to Pakistan exacerbated the two countries’ animosity.

Pakistan has highlighted the Enemy Property Act in different bilateral negotiations over the years, claiming it as an example of the Indian government’s discriminatory treatment of Pakistanis and their descendants.

The act itself, as well as the feelings it elicits, can be a stumbling block in peace endeavours. Addressing the issues raised by this measure is critical for any meaningful conversation between the two countries.

Amendment to the 1968 Act

The Enemy Property Act of 1968, which deals with the concept of enemy properties, is also responsible for managing and regulating enemy property matters. However, there are some loopholes in this Act that need to be addressed, so a Bill of Enemy Property (Amendment and Validation) of 2016 was first introduced in the Lok Sabha in March of 2016.

The Bill was subsequently referred to the Rajya Sabha, which formed the Selection Committee and asked it to provide a report. The current measure was submitted to replace the Enemy Property (Amendment and Validation) Ordinance, 2016, which the President announced on January 7, 2016. As a result, the current Bill proposes to alter both the Enemy Property Act of 1968 and the Public Premises (Eviction of Unauthorised Occupants) Act of 1971.

The Central Government has designated various properties belonging to Pakistani and Chinese citizens as enemy property in this Bill, following India’s external belligerence. A regulating agency known as the “Custodian of Enemy Properties in India” or “CEP” was established under the Enemy Property Act of 1968. Courts have no authority to intervene in CEPI orders.

The Regulatory Body under the Enemy Property Act, 1968, which is the CEPI, has specific powers, and under these powers, the Body used to pass orders that the Courts of India first supported. However, as the various courts delivered their rulings, the CEPI’s functions were restricted.

The Hon’ble Supreme Court ruled in Union of India vs. Raja MAM Khan³ that

• If the “Enemy” dies, the property is transmitted through succession and no longer considered enemy property if the successor is an Indian citizen.
• The Custodian will have no right, interest, or title to the property; only the enemy will have it.
• Section 6 of the aforementioned Act allows the adversary to sell the property.⁴
• The Custodian’s authority includes maintaining, preserving, and controlling enemy property for a set amount of time and for a specific reason.
• The Law of Succession will be applied to the hostile subject’s legal heirs.

Another case in this series is the Bombay High Court’s decision in Ambu Trikam Parmar vs. Union of India & Others:⁵ “According to the provisions of the Act, the power of the Custodian of Enemy Properties in India does not include the eviction of an occupant in the unauthorised occupation, without following the proper procedure such as filing of the suit or filing a suit for recovery.”

As a result of these judicial precedents, the government thought it was urgent to clarify the legislative objective behind the Enemy Property Act of 1968. As a result, several revisions are included in this Bill to explain the intent of the legislation.

Reasons for proposing this Bill were as follows:

• The definition of “Enemy” and its subject should be amended to include legal successors of the property regardless of the citizenship of the enemy subject.
• The rights and functions of the Custodian are specified in the Act in a very confusing and vague manner.
• Previously, the enemy subject could sell enemy property, but they can no longer do so.
• This Bill makes it illegal for civil courts to intervene in disputes involving enemy property.
• Following the passage of the Bill, the government will be able to exploit enemy property exclusively for public purposes.

The following are some of the adjustments proposed by the Amendment Act:

• Once an enemy property is vested in the custodian, it is vested in him as enemy property regardless of whether the enemy, enemy subject, or enemy firm has ceased to be an enemy for reasons such as death.
• The law of succession does not apply to enemy property; any property vested in the custodian cannot be transferred by an enemy, enemy subject, or enemy firm.
• The custodian must keep the enemy property until it is disposed of in accordance with the Act’s stipulations.

These revisions were made with the intention of closing all of the loopholes in the 1968 Act. Section 18 of the Act mentioned “divesting of enemy property vested in the Custodian.”⁶

It states that the Custodian may sell enemy property that has been vested in him and is still in his possession only if the Central Government authorises him to do so by general or particular order. The property can be transferred to the owner or any other person specified by the Central Government, and upon such transfer, the property no longer vests in the Custodian.

Section 10 of the Act should also be reviewed to gain a better understanding of the situation.⁷ According to Section 10(1) of the Act, if a company has issued any security and that firm is an enemy property, the Custodian may proceed to sell those securities, and such securities may be purchased by such company itself after gaining the custodian’s authorisation in this regard.⁸ It further specifies that the corporation may re-issue its securities at its discretion.

A detailed reading and interpretation of the provision reveals that the custodian has a considerable deal of discretion, as the corporation can only purchase back its securities with the custodian’s prior authorization. And nowhere is it said that the custodian must obtain prior consent from the Central Government or even imitate the same to the Central Government before issuing such authorisation.

As a result, the amendment attempts to eliminate the scopes under which enemy property might be transferred to such enemy or any person on behalf of such enemy. Furthermore, the amendment stipulates that such property would be exempt from succession legislation. It clarifies that, upon the death of the genuine owner, no one can claim the property on the grounds that it is his ancestral property. The amendment further states that the property would not cease to be enemy property just because the adversary died.

Conclusion

As India evolves and its global standing shifts, there is an increasing call for amendments to the Enemy Property Act. One of the most serious concerns levelled at the act is its overly wide definitions, which can lead to abuse. Future revisions may focus on restricting these criteria in order to prevent possible misuse. Given the issues and court conflicts, there is a drive for clearer principles on legal heirs’ rights, maintaining a fair balance between state interest and individual rights.

Global geopolitics and international relations influence country policies significantly. As India’s relations with countries such as China and Pakistan improve, there may be a drive to change or even delete specific provisions of the act. As global human rights rules grow, India, keen to retain its image on the international stage, may revisit the act to ensure it complies with these criteria.

Given the shifting global landscape and increased emphasis on diplomacy, India may take a softer position, resulting in the return of further properties or perhaps the repeal of the act. As India seeks to strengthen its economy, properties covered by the act may be monetized more aggressively, potentially resulting in economic booms in places with considerable “enemy properties.” The legislation might be used as a vehicle for reconciliation with “enemy” countries, with properties returned as a gesture of goodwill.

Finally, the Enemy Property Act, implemented in the aftermath of the 1965 Indo-Pak conflict, serves the twin objective of safeguarding properties left behind by persons who relocated to enemy nations while also managing them in the national interest. However, the act poses difficult challenges that must be balanced between individual rights and national objectives.

This legislation, which has its roots in historical wars, continues to have geopolitical and economic ramifications today. This needs an informed debate about updating the act to reflect India’s changing diplomatic relations and human rights values.

References

• The Enemy Property (Amendment and Validation) Bill, 2016 (prsindia.org)
• Highlights And Analysis Of The Enemy Property (Amendment And Validation) Bill, 2016 – Constitutional & Administrative Law – India
• Explained: What is enemy property in India, and how has the government dealt with it? |
• How PM Modi’s pitch for Enemy Property Act is connected with state of economy
• Enemy Property Act

Endnotes

1. The Enemy Property Act, 1969, s.2(c)

2. The Enemy Property Act, 1969, s.5

3. 2005 (8) SCC 696

4. The Enemy Property Act, 1969, s.6

5. Writ Petition No. 843 of 2009

6. The Enemy Property Act, 1969, s.18

7. The Enemy Property Act, 1969, s.10

8. The Enemy Property Act, 1969, s.10(1)