Tuesday 12 May 2020

Supreme Court: Basic concept of Escheat or bona vacantia


Civil Appeal No. 6677 of 2019 

Decided On: 28.08.2019

 State of Rajasthan  Vs.  Lord Northbrook 

Hon'ble Judges/Coram:
R. Banumathi and Indira Banerjee, JJ.

The expression "escheat" or "bona vacantia" has not been defined in the Escheats Act. However, the Escheats Act having been enacted in terms of Article 296 of the Constitution, the expressions are to be understood in the sense in which they have been used in Article 296 of the Constitution, set out hereinbelow for convenience:

296. Property accruing by escheat or lapse or as bona vacantia Subject as hereinafter provided any property in the territory of India which, if this Constitution had not come into operation, would have accrued to His Majesty or, as the case may be, to the Ruler of an Indian State by escheat or lapse, or as bona vacantia for want of a rightful owner, shall, if it is property situate in a State, vest in such State, and shall, in any other case, vest in the Union: Provided that any property which at the date when it would have so accrued to His Majesty or to the Ruler of an Indian State was in the possession or under the control of the Government of India or the Government of a State shall, according as the purposes for which it was then used or held were purposes of the Union or a State, vest in the Union or in that State Explanation In the article, the expressions Ruler and Indian State have the same meanings as in Article 363.

77. Article 296 does not leave any discretion for determination of what might constitute escheat or bona vacantia. Article 296 makes it clear that the principles applicable in this regard, prior to commencement of the Constitution of India, would continue.

78. Law relating to bona vacantia provides for conservation of abandoned properties. The nature of the property to which the Escheats Act applies must necessarily be abandoned property in the sense that there should be no claimants to the property, as argued by Dr. Singhvi.

79. The question is, what exactly is "abandoned Property" or what property is "bona vacantia". In Bombay Dyeing Manufacturing Co. Ltd. v. State of Bombay MANU/SC/0014/1957 : AIR 1958 SC 328, a Constitution Bench of this Court while deciding the challenge to the constitutional validity of the Bombay Labour Welfare Fund Act (40 of 1953), observed and held that the expression "abandoned property", or to use the more familiar term "bona vacantia", comprises properties of two different kinds, those which come in by escheat and those over which no one has a claim. The relevant paragraph of the judgment is extracted in the judgment of my esteemed sister.

80. Property is subject to the right of escheat, where upon intestacy, there is no heir. Escheat was a right, whereby land of which there was no longer any tenant, returned by reason of tenure, to the lord by whom, or by whose predecessors in title, the tenure was created.

81. In A-G of Ontario v. Mercer (1883) 8 App Cas 767 at 772, Lord Selborne LC held "Escheat is a term of art and derived from the French word escheat that is cadere excidere or accidere and signifyeth property when by accident the lands fall to the lord of whom they are holden". Escheat was an incident of feudal tenure and was based on the want of tenant to perform the feudal services.

82. As per Paragraph 1437 of the fourth edition of Halsbury's Laws of England, (Vol 17) escheat propter defectum tenentis occurred in the case of intestate death, where the last owner of the land died intestate, without any heir. In this event, a person became possessed of lands as purchaser, and died intestate without issue; the Lord or the Crown, as the case might be, re-entered in right of his or its former ownership, the estate which was granted, having come to an end.

83. As very rightly observed and held by my esteemed sister, the doctrine of escheats postulates that where an individual dies intestate and does not leave behind any heir, who is qualified to succeed to the property, the property devolves on the Government.

84. An abandoned property is a property for which no claim has been made for a substantially long period. The length of the period for which no claim is made, should be such as to raise the presumption that the property is abandoned.

85. In Bombay Dyeing Manufacturing Co. Ltd. (supra), this Court found that initiation of escheat proceedings on the ground of absence of claim for a period of three years was unconstitutional.

86. Dr. Singhvi submitted, and in my view, rightly, that if during an enquiry to ascertain whether property was abandoned or not, any claim was made, the proceedings had to be dropped.

87. If no claims are made or if the State arrives at the opinion that all claims to the property are mala fide, only then may it apply to the Court for final determination as to the nature of the property, and thereafter initiate escheat proceedings.

88. In the proceedings before the Court, the Court would necessarily have to arrive at a finding that the property had been abandoned and that there were no heirs who could come forward to claim the properties. To put it differently, there would have to be total and absolute failure of heirs.

89. As held by this Court in State of Punjab v. Balwant Singh and Ors. (supra), quoted by my esteemed sister, the State Government does not take the property as a rival or preferential heir of the deceased, but as the lord paramount, when there is no heir qualified to succeed.

90. The proposition that escheat is a doctrine that recognises State as a paramount sovereign, in a clear case of failure of heirs, and that when a claim of escheat is put forward by the Government, the onus lies heavily on the Government to prove the absence of any heir anywhere in the world, finds support from the judgments of this Court in Kutchi Lal Rameshwar Ashram Trust Evam Anna Kshetra Trust v. Collector, Haridwar and Ors. MANU/SC/1214/2017 : (2017) 16 SCC 418 and State of Bihar v. Radha Krishna Singh 7 Ors. MANU/SC/0303/1983 : (1983) 3 SCC 118 referred to by my esteemed sister.

91. As noted by my esteemed sister, the Single Bench of Delhi High Court had dismissed Testamentary Case No. 26 of 1987 on 3.7.2012 holding that the executors of the will had not been able to prove the Will dated 30.10.1985 and the codicil dated 7.11.1985.

92. The judgment and order dated 3.7.2012 dismissing Testamentary Case No. 26/1987 is of no consequence. It is well settled that if a will fails, the property has to be treated as intestate, which devolves upon the natural heirs in accordance with the applicable laws of succession. As observed by my esteemed sister, the dismissal of the probate case might mean that the Trust cannot lay claim to the properties. However, that does not make the properties escheated properties.

93. If, upon enquiry Under Section 6 of the Escheats Act, the Collector finds that the property in question is not of the nature to which the Escheats Act applies, he is obliged to order the proceedings to be closed and the property to be allowed to remain with the person in whose possession it might then be, or if possession thereof has been taken Under Section 4(c) or Section 6, the Collector is obliged to restore the property to the person from whom possession was so taken, as mandated by Section 6(9) a) of the Escheats Act.

94. It is true that the Respondent trustees filed the writ petition basing its claim on the Will. The locus standi of the writ Petitioners was never in issue. By entertaining the writ petition the High Court, in effect, accepted that the Respondent trustees of the Trust had locus standi to file the writ petition, and rightly so.

95. The writ petition filed by the Trustees having been entertained and kept pending, the High Court would not have been justified in dismissing it on the ground that the Trust had no right to lay claim in the properties in question, in view of dismissal of the probate case, more so, when the appeal filed by the Trustees is still pending. The High Court was right in not dismissing the writ petition.

96. The fact that the High Court had earlier, on the prayer of the Trustees, adjourned the writ petition sine die, to await the decision in the Probate application, did not debar the High Court from exercising its writ jurisdiction after disposal of the Probate case. At the cost of repetition, it is reiterated that even though the Probate case has gone against the trustees, the appeal was and is still pending before the Division Bench, as noted by my esteemed sister.

97. It is true that the Khetri Trust can claim a right over the property in terms of the will executed by Raja Bahadur, only if it succeeds in the appeal pending in Delhi High Court. This in my view, did not denude the trustees of the locus standi to pursue the writ petition challenging the initiation of proceedings under the Escheats Act.

98. As held by this Court in State of Bihar v. Radha Krishna (supra), the onus to establish that a property is bona vacantia is on the Government. The burden of proof is heavy. This proposition also finds support from Kutchi Lal Rameshwar Ashram Trust (supra).

99. The threshold requirements laid down by this Court upon interpretation of Article 296 are the conditions precedent for initiation of proceedings under the Escheats Act. The authorities would have to be satisfied that the properties had been abandoned and that there were no known claimants of the said properties The purpose of the legislation is to conserve abandoned property and safeguard the property for the benefit of the rightful claimant who may come later.

100. Mr. Paras Kuhad, learned senior Counsel appearing on behalf of some of the Respondents adopted the arguments advanced by Dr. Singhvi and further submitted, and rightly, that before the Collector can apply to the Court for vesting or custody of the property in terms of the Section 6(7) and 6(9) of the Escheats Act, the following tests should be satisfied.

(i) The case should not involve complicated questions of law as to title or status which has not previously been adjudicated by a Civil Court of competent jurisdiction.

(ii) There should not be claimants to the property.

(iii) The property should be of the nature to which the Escheats Act applies i.e., bona vacantia and/or in other words abandoned property.

(iv) The last owner should have died intestate without leaving any known heirs. In other words there has to be a complete and absolute failure of heirs and thus any possibility of claim being made to the property by any person.

(v) A claim made pursuant to a proclamation issued under the Escheats Act should prima facie be not maintainable. If a claim is prima facie maintainable even though the claim may not have been established, no application for vesting or custody can be made.

(vi) Even if no claim is filed, the Collector should be satisfied that there is no person entitled to claim the property. In other words, there should be no person entitled to claim the property irrespective of whether there was any claim to the property and irrespective of whether the claim, if any, could be established.

(vii) The Collector is satisfied that it is a bona fide case of property vesting in the State as ultima heres Under Section 296 of the Constitution of India by escheat or as bona vacantia. The vesting of the property in the State as ultima heirs by escheat or as bona vacantia must positively be established and not likely presumed.

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