Court’s Main Ruling:

A Division Bench of Justice Suman Shyam and Justice Shyam C. Chandak gave this important ruling. The Court said that the Enemy Property Act, 1968 allows enemy property to vest in the Custodian by law in certain situations. However, the Custodian cannot enforce this only by making an assertion. The legal procedure and the principles of natural justice must be followed before a property owner is deprived of rights.

What Happened:

The case arose from several writ petitions concerning properties forming part of the Khan Bahadur Haji Shaikh Meherbaksh Wakf-alal-aulad. This was a family Wakf created in 1926. The Mutawallis later sold these properties to different buyers, including Mehta Impex Private Limited. For many decades, the buyers’ names were recorded in the revenue records. There was no indication that the properties had ever vested in the Custodian of Enemy Property.

However, in December 2021, the Custodian sent communications directing the Collector to treat the properties as enemy properties. Based on these directions, the revenue authorities entered the Custodian’s name in the property records in May 2023 and deleted the names of the existing owners. The buyers and the Wakf then approached the High Court.

Earlier History:

The dispute arose from the Wakf’s family history. Nabilla Begum, a descendant of the Wakif, was a Pakistani national and had earlier claimed a share in the Wakf properties. In an earlier litigation before the Bombay High Court, the parties reached a settlement. Under that settlement, ₹1,25,000, representing the beneficial interest of the Pakistani beneficiaries, was deposited with the Court.

In 2007, the Custodian consulted the Ministry of Law and Justice and then issued a No Objection Certificate. The Custodian noted that an attempt to vest the Wakf properties in the Custodian might not stand legal scrutiny. The earlier proceedings were therefore closed. However, years later, the Custodian reopened the matter and issued fresh communications to record the properties as enemy property.

Buyers’ Argument:

The petitioners argued that the properties had never been declared enemy property under Rule 133-V of the Defence of India Rules, 1962. They also said that the Central Government had never issued a notification or order vesting these properties in the Custodian. They submitted that they had lawfully bought the properties through registered conveyances long before the challenged communications were issued. Their names had remained in the revenue records since 1990.

They argued that, even if the Custodian wanted to use the Enemy Property Act, the authorities had to first issue notices, conduct an inquiry, and follow the principles of natural justice.

Custodian’s Argument:

The Custodian took the opposite view. It said that if a property belonged to an enemy subject, the property automatically vested in the Custodian under the Enemy Property Act. According to the Custodian, because one branch of the Wakif’s family had moved to Pakistan, the property became enemy property automatically under the law. Therefore, it said that no prior notice or legal decision-making process was needed before ordering changes in the revenue records.

Wakf Is Valid:

The Division Bench closely examined the law relating to Wakfs and enemy property. It first considered the nature of a Wakf-alal-aulad. The Court held that such a Wakf, created under the Mussalman Wakf Validating Act, 1913, remains a valid legal institution.

The Bench rejected the argument that the Wakf was invalid because it was allegedly not registered. It held that non-registration under the Muslim Wakf Act, 1954 could at most expose the Mutawallis to statutory consequences. It did not make the Wakf invalid or end its legal existence. The Court also found that there was nothing on record to show that the purchasers had not acquired valid title to the properties.

Two Legal Routes:

The Court then examined the legal history of enemy property law. These included the Defence of India Act, 1962, the Defence of India Rules, the Enemy Property Act, 1968, and the changes made to the law in 2017.

It said that the law provides for two different situations in which a property may vest in the Custodian:

• The Central Government specifically vests identified property through a notification under the Defence of India Rules.

• The Custodian independently decides, after meeting the legal requirements, that a property falls within the definition of “enemy property” under the Act.

Legal Conditions Apply:

However, the Court made it clear that, even if a property becomes vested in the Custodian by law, the Custodian cannot ignore the legal protections provided under the law.

It said:

“Even without a notification or order issued by the Central Government, specifically vesting the enemy property on the Custodian, there could be statutory vesting of the enemy property on the Custodian simply by operation of law. However, such vesting would be contingent upon fulfilment of the requirements of the statute.”

Inquiry Is Necessary:

The Bench explained that before treating a property as enemy property, the Custodian must first verify the facts that legally allow it to take such action. The Custodian must carry out the inquiry required by law and be satisfied that the property actually comes within the legal definition of enemy property. The Court said:

“It would, therefore, be incumbent upon the Custodian to make necessary inquiry and satisfy himself that the property in question is in fact an enemy property within the meaning of the Act.”

Hearing Is Necessary:

The Court strongly stressed the need to follow principles of natural justice. It said that even though the Enemy Property Act does not clearly list every procedural protection, the affected person must be given a chance to be heard. This is because declaring a property as enemy property can seriously affect the civil rights of the people who possess it.

The Bench said:

“The Custodian will have to scrupulously adhere to the principles of natural justice and give proper opportunity of being heard to the affected party before initiating any action in respect of a property in possession of a party by treating the same as enemy property.”

Required Process:

The Court referred to the Enemy Property Rules, 2015. These Rules clearly require the authorities to first identify the property, collect relevant information, send notices to everyone who claims ownership or any interest in it, consider their objections, and conduct an inquiry.

Only then can they issue a certificate under Section 5A declaring the property to be enemy property. Steps that follow from this, such as changing the revenue records, can be taken legally only after this process is completed.

Court’s Criticism:

The Bench criticised what happened in this case. It found that the Custodian had directed the revenue authorities and obtained mutation entries without first following the mandatory legal process. The Court held that revenue records cannot be changed merely because the Custodian believes that a property may be enemy property. It said:

“Property held by any person or institution cannot be encumbered by treating the same as Enemy Property based on mere ipse dixit of the Custodian, that too, by issuing ex-parte orders or directions.”

Final Decision:

The High Court finally held that the Custodian’s communications and the mutation entries made because of them could not continue. This was because they were made without following the procedure required under the Enemy Property Act and the Enemy Property Rules, 2015.

The Court said that legal powers which affect valuable property rights must be used strictly according to the law. Procedural safeguards are not just formal steps; they are necessary protections against the arbitrary use of power.

Case Details: Mehta Impex Private Limited v. State of Maharashtra (With Connected Matters) [Writ Petition No. 1080 of 2024]