Judgement

RAMASWAMI, J. : The proprietors of two firms styled "Adam Hajee Peer Mohd. Essack" and "Hajee Ebrahim Kassam Cochinwala" had in the year 1947, migrated to Pakistan and both these firms became vested in the Custodian of Evacuee Properties for the State of Madras under S. 8 of the Administration of Evacuee Property Act, 1950, hereinafter referred to as the 1950 Act. On March 6, 1952 the appellant was appointed as Manager of the two firms under S. 10(2)(b) of the 1950 Act. The appellant also furnished security of Rs. 20,000 before taking possession of the business of the firms as Manager. The order of appointment-Ex. P-1, dated March 6, 1952 states:

"The Custodian approves the proposal of the Deputy Custodian, Malabar that the Management of both the firms of Adam Hajee Peer Muhammad Essack and Hajee Ebrahim Kassam Cochinwala at Kozhikode may be allotted to Sri L. S. Lalwani for the present on the same system as exists now between the Government and the present two managers and on his furnishing a security of Rs. 20,000 to the satisfaction of the Deputy Custodian. The question of outright allotment as contemplated in Custodian General s letter No. 2811/CG/50 dated 20th March 1950 will be taken up in due course."

On October 9, 1954 the Displaced Persons (Compensation and Rehabilitation) Act, 1954 was passed which will hereafter be referred to as the 1954 Act. On April 11, 1956 there was an advertisement published in the Press for the sale of the aforesaid evacuee properties. The appellant applied to the Chief Settlement Commissioner for stopping the sale of the two concerns. On April 25, 1956 the Central Government made an order-Ex. P-5-which states:

"I am directed to state that it has been decided in principle that the aforesaid evacuee concerns will be allotted to you. The terms of allotment will be communicated to you separately. Meanwhile, you will continue to function as the Custodian s Manager for these concerns in terms of S. 10 (2) (b) of the Administration of Evacuee Property Act, read with R. 34 of the rules made under the Act."

On June 21, 1956 another letter-P-8-was written to the appellant by the Custodian of Evacuee Properties which states:

"The Deputy Custodian is informed that the Government of India have decided that the two evacuee concerns, viz., firms of Adam Hajee Peer Mohammed Essack and Hajee Ebrahim Kassam Cochinwala of Kozhikode are to be allotted to the present Manager Shri L. S. Lalyani and ultimately sold to him. He is also informed that until the question of terms and conditions of allotment of the concerns in question is decided Shri Lalvani will continue to function as Custodian s Manager for these concerns in terms of Section 10 (2) (b) of the Administration of Evacuee Property Act, 1950 read with R. 34 of the rules made thereunder. The Deputy Custodian is requested to evaluate the business concerns properly after getting prepared a balance sheet of each year of the vesting of the concerns, evaluating the concerns, the Deputy Custodian should keep in view the other assets and liabilities of the concerns and their goodwill, etc. His comment and suggestions as to how and by what easy instalments the value of the concerns if sold to Shri Lalvani is to be realised from him should also be intimated."

The bargain was not concluded and on March 25, 1958 there was an advertisement in the Press about the public auction of the business of the firms. The appellant moved the High Court of Kerala for grant of a writ restraining the District Collector from selling the business of the firms by a public auction. The application was allowed and on June 25, 1959 the Kerala High Court directed the District Collector not to sell the properties of the business of the two firms without an appropriate order of the Chief Settlement Commissioner. The decision of the High Court is based upon the ground that there was no order under the 1954 Act by the Chief Settlement Commissioner for sale of the properties and that in the