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Introduction
India’s independence in 1947 was accompanied by the tragic partition, which led to large-scale violence, displacement, and loss of life.
Many individuals were unable to migrate to their desired countries due to the chaos. Once the situation normalised, people sought citizenship in the country where their families resided. However, when the Indo-Pak wars of 1965 broke out in the country. To safe guard the public of India, the Indian government led to the issuing notifications via its Notification No. 12/2/65-E Pty dated 10.09.1965 and S.O. 5511 dated 18.12.1971 under the Defence of India Rules 1962, stating that all immovable properties in India belonging to Pakistani nationals would be vested in the Custodian of Enemy Property for India.This is in pursuance of the war, as if the Pakistani nationals remained the owner of the Property in the Indian territory. Under those circumstances, the Property might be misused for planning and plotting terrorism, which will ultimately lead to endangering the lives of the general public of India.
To regulate such properties, the government, in furtherance of the notification, had introduced the Enemy Property Act of 1968. This Act defined an “Enemy” as any person who had acquired the citizenship of an enemy country. In accordance with the Act, the Country will be termed as Enemy Country if at any point in time in the past the Country was at war with India or might be in future will be considered as an Enemy Country. At present, India has engaged in wars with Pakistan and China, and consequently, the Indian citizens who have acquired the Citizenship of these two countries are classified as “Enemies” under the Act. Consequently, any property owned by such individuals in India is designated as “Enemy Property.” However, in accordance with Section 2(b), the “enemy” or “enemy subject” or “enemy firm” means a person or country who or which was an enemy, an enemy subject or an enemy firm, as the case may be, under the Defence of India Act, 1962 and the Defence of India Rules, 1962 but does not include a citizen of India. Consequently, it can be determined that the Legal heirs who have not acquired citizenship of the Enemy Country will have Ownership rights over the Property being owned by the Enemy, and if not, the Property will be vested in the name of the Custodian. The Custodian will be managing and administrating the Property. Furthermore, in accordance with Section 6, despite the property vested in the name of theCustodian, the enemy or an enemy subject or an enemy firm can transfer the Property to an Indian Citizen since the Enemy is the owner of the Property and the Custodian acts as a Trustee. However, if the Central Government felt that such a transfer was/is injurious to the public interest or was/is made with a view to evading or defeating the vesting of the property in the Custodian. Afterwards, the Central Government, after giving a reasonable opportunity to the transferee to be heard,subsequently passed an order/declared the transfer void. In furtherance, the property will continue to be vested or deemed to be vested in the name of the Custodian. However, the same led to the Multiplicity of the case related to the same subject matter in the Hon’ble High courts and Supreme Court.
Legal Debate
A critical legal debate arose regarding whether an enemy or their legal heirs retained any rights over their vested property in the name of the Custodian. In the landmark judgment of Union of India & Ors. Vs. Mohammed Amir Mohammad Khandecided on 21.10.2005, the Supreme Court held that under the Enemy Property Act, the title of an Enemy’s Property does not transfer to the Custodian. Instead, the Custodian only assumes possession, control, and management of the property. The judgment clarified that the Enemy remains the legal owner of the property.
Furthermore, the Supreme Court ruled that if a legal heir has never acquired Enemy Country Citizenship, they have a rightful claim to the Enemy Property. Additionally, as per the act, if ownership is transferred to an Indian citizen, the property ceases to be classified as enemy property. This ensured that lawful owners preserved their property rights. However, it was clarified in the act that if the Central Government feels it is against the Public interest, then the said transfer can be termed void, and the Property will continue vesting in the name of the Custodian.
The 2017 Amendment and Its Implications
Under those circumstances, where the afore stated judgement was in effect. The Central Government amended the Enemy Property Act in 2017, drastically altering the legal provisions. The amendment stripped legal heirs of their rights and declared any Legal Heirs rights over the enemy property as an Indian citizen as illegal / not in accordance with the Law. In accordance with the Amendment, in furtherance of the definition as stated in the Enemy Property Act, 1968, the act further added that it does not include a citizen of India other than those citizens of India, being the legal heir and successor of the “enemy” or “enemy subject” or “enemy firm” which means the Indian Citizen being the legal heir and successor cannot have the right over the Property. Consequently, the rights of the Legal Heirs over the property have been seized. This amendment also applied retrospectively, raising concerns about violations of legal heirs’ rights. Even the amended act prohibited the transfer of the property vested in the name of a Custodian via an enemy, enemy subject or enemy firm. Consequently, it can be determined that the Property, once acquired the title of the Enemy Property, will remain as an Enemy Property. However, under these circumstances, the question arises via the said amendment concerning who will be the owner of the Property, whether it will be the Central Government, the Enemy or his Legal Heirs being the Indian Citizen.
Supreme Court Stance Post Amendments
The Supreme Court recently revisited the issue in Lucknow Nagar Nigam & Ors. Vs. Kohli Brothers Colour Lab Pvt. Ltd. & Ors. decided on 22.02.2024 on the afore-stated issue. The Court reaffirmed that the Custodian of Enemy Property does not acquire ownership. Rather, it only acts as a trustee for the management and administration of such properties. The Court emphasised that there is no transfer of ownership from the original owner to the Custodian or the Union of India. Consequently, enemy properties do not become Union properties or the Central Government Property.
From the above judgments, it is clear that the enemy remains the lawful owner of their property, and such property can be transferred to Indian citizens or legal heirs. However, the 2017 amendment has fundamentally altered this principle by retroactively revoking these rights. The Supreme Court has yet to decide conclusively on the retrospective applicability of these amendments as they potentially violate the property rights of legal heirs and transferees. The forthcoming judicial decisions will play a crucial role in determining the fate of such properties and their rightful owners in India. However, the Central Government, via its notification no. CG-DL-E-17102024-258001, dated 16.10.2024, had issued Guidelines for the Disposal of Enemy Property.
Central Government Latest Notification
The Central Government has introduced a significant amendment impacting the valuation and sale of enemy properties, particularly concerning the rights of occupants. Under the revised guidelines, long-term occupants now have the first right to purchase these properties—specifically those valued below ₹1 crore in rural areas and ₹5 crore in urban areas.
If an occupant chooses not to purchase, the property will be disposed of according to existing regulations. This amendment reflects the evolving legal stance on enemy property, aligning with various Supreme Court judgments that emphasize providing stability to long-term occupants.
However, while this move appears to offer a fairer approach, it raises critical legal concerns, especially in light of the 2017 amendments that retrospectively revoked the rights of legal heirs. This change could create potential conflicts between occupants, legal heirs, and transferees of enemy property who acquired ownership before the 2017 amendment.
Does this new provision strike the right balance between stability for occupants and justice for rightful heirs? Or does it further complicate the legal landscape surrounding enemy properties in India? The Supreme Court of India has yet to decide on the aforementioned questions.
Conclusion
The legal status of enemy property in India remains a contentious issue, shaped by evolving judicial interpretations and legislative amendments. While the Supreme Court has consistently held that the Custodian does not acquire ownership but merely manages such properties, the 2017 amendment significantly altered this principle by retrospectively stripping legal heirs of their rights. This raises serious concerns about fairness and property rights, particularly for those who never acquired citizenship of enemy country. As legal challenges continue, the judiciary’s future stance will be crucial in balancing national security concerns with individual property rights, ultimately shaping the fate of enemy properties in India.
Author – Akhand Pratap Singh Chauhan, Partner
Co-Author – Sachin Sharma, Assessment Intern