The Custodian has the power to terminate a lease granted by him under Section 12 of the Administration of Evacuee Property Act, 1950, and to issue directions under Section 10 of the Act only with regard to evacuee property.

Headnote:
ADMINISTRATION OF EVACUEE PROPERTY ACT, 1950 - SECTION 12 - CUSTODIAN'S POWER TO TERMINATE LEASE - LEASE GRANTED BY CUSTODIAN - DIRECTIONS UNDER SECTION 10 - SCOPE.
Fact of the Case:

The petitioners were declared evacuees and their property vested in the Custodian. The Custodian entered into an agreement of lease with the petitioners in respect of some of the properties of the evacuees. The agreement provided that the petitioners should have a lease of these properties for a period of five years. The Custodian issued a notice to the petitioners to show cause why the agreement of lease should not be forthwith cancelled and terminated and the petitioners be evicted from the demised premises. The Custodian also issued certain directions to the petitioners, including a direction not to remove stocks of raw materials, finished goods, etc., lying on the premises without the express permission of certain Inspectors posted by the Custodian at the mills factory, godowns and offices.
Finding of the Court:

The Court held that the Custodian had the power to terminate the lease granted by him under Section 12 of the Administration of Evacuee Property Act, 1950. The Court also held that the Custodian had exceeded his powers under Section 10 of the Act by issuing directions to the petitioners with regard to property which was not evacuee property.
Issues: 1. Whether the Custodian had the power to terminate the lease granted by him under Section 12 of the Administration of Evacuee Property Act, 1950? 2. Whether the Custodian had the power to issue directions to the petitioners with regard to property which was not evacuee property under Section 10 of the Act?
Ratio Decidendi: 1. The Court held that the power of the Custodian under Section 12 of the Administration of Evacuee Property Act, 1950, to cancel any allotment or terminate any lease or amend the terms of any lease or agreement under which any evacuee property is held or occupied by a person, is not limited to leases which were granted by the evacuee. The Court held that the power extends to all leases, the subject-matter of which, is evacuee property. 2. The Court held that the power of the Custodian under Section 10 of the Administration of Evacuee Property Act, 1950, to take such measures as he considers necessary or expedient for the purpose of securing, administering, preserving and managing any evacuee property is confined to taking necessary action with regard to evacuee property. The Court held that it does not confer power upon him to take any measures with regard to property which is not evacuee property.
Final Decision: The Court partly allowed the appeal. The order of the lower court prohibiting the Custodian from proceeding with the show cause notice under Section 12 was set aside. The judgment of the lower court was confirmed to the extent that it had quashed the order of the Custodian which seeks to give directions to the petitioners. There was no order as to costs throughout.

JUDGMENT - Chagla, C.J.

1. This appeal raises a very important question as to the right of the Custodian of evacuee property to terminate a lease granted by him in respect of evacuee property, and also the right of the Custodian to give certain directions under Section 10 of the Administration of Evacuee Property Act, 1950.

On 12-9-1951, Messrs. Ahmed Abdul Karim Bros., Ltd., were declared to be evacuees and their property vested in the Custodian. On 30-8-1952, the Custodian entered into an agreement of lease with the petitioners in respect of some of the properties of Ahmed Abdul Karim Bros., Ltd., which had been declared to be evacuee properties, and the properties in respect of which the lease was executed were three mills with bungalows and chawls attached thereto at Ambernath, and a Bobbin Factory, and the agreement of lease provided that the petitioners should have a lease of these properties for a period of five years.

It was provided that on the execution of the agreement the lessees shall deposit with the lessor a sum of Rs. 1,50,000 as security for the due fulfilment and observance of the term as to regular payment of the instalments of rents provided by the agreement, and this security of Rs. 1,50,000 was liable to be forfeited if any instalment of rent was not paid on the due date. The rent payable by the lessees in respect of the demised premises was fixed at Rs. 6,00,000 and the rent was to be paid by quarterly instalments of Rs. 1,50,000 each.

It was also provided that within 30 days from the completion of valuation of all stocks of raw materials, unsold finished goods, stores, spare parts and other articles referred to in the next clause, the lessees should deposit with the lessor a sum of Rs. 7,00,000 or furnish to the Custodian a guarantee for the like amount by a bank acceptable to the Custodian as security for payment of the value of these goods. Then clause. 6 embodied an agreement of the sale of stocks of raw materials and unsold finished goods, etc., to which we have just referred, by the Custodian to the lessees and the price of the goods was to be fixed through one or more experts who would be the representatives of a recognised mercantile association dealing in goods of similar nature, to be nominated by the Custodian.

The sale was to be completed within a period of three months from the date of the agreement and the balance of the purchase price was to be paid on or before the date of completion of the sale. There was also a provision by which the lessees had to insure and keep insured the demised premises and the machinery lying therein, in the joint names of the lessor and the lessees, and the insurance was to be effected with a company acceptable to the lessor. There was also a submission clause by which disputes between the parties were to be referred to arbitration. The lessees were put into possession of the demised premises and all the stocks which they had purchased on 31-8-1952.

2. On 12-2-1954, the Custodian issued a notice against the petitioners to show cause and in this notice the Custodian stated that the petitioners had generally failed to observe and fulfil most of the important terms and conditions of the agreement of lease and in particular they had committed breaches of and violated the terms and conditions specified in the schedule annexed to this notice. By this notice, which the Custodian said he, was issuing in exercise of the powers, vested in him by Section 12 of the Administration of Evacuee Property Act, 1950, read with Sub-rules (2), (4) and (5) of Rule 14, being the rules framed under the Act, he was calling upon the petitioners to show cause on 22-2-1954, why the agreement of lease should not be forthwith cancelled and terminated and the petitioners be evicted from the demised premises.

In the schedule the Custodian set out the various important defaults committed by the lessees. According to the Custodian, the lessees had committed default in paying the sixth quarterly instalm

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