LEGAL ISSUE: Whether the State of Rajasthan rightfully invoked the Escheats Act, 1956 to take over properties of a deceased person who died intestate and without legal heirs.
CASE TYPE: Civil Law – Escheat, Property Law
Case Name: State of Rajasthan and Ors. vs. Lord Northbrook and Ors.
[Judgment Date]: 28 August 2019
Introduction
Date of the Judgment: 28 August 2019
Citation: 2019 INSC 916
Judges: R. Banumathi, J. and Indira Banerjee, J. (The matter was referred to a larger bench due to a difference of opinion between the judges)
What happens to a person’s property when they die without a will and without any legal heirs? This question lies at the heart of a recent Supreme Court case, State of Rajasthan vs. Lord Northbrook. The case examines the State’s power to claim such property under the principle of escheat, a legal doctrine that allows the government to take ownership of abandoned or unclaimed property. The core issue revolves around whether the State of Rajasthan correctly applied the Rajasthan Escheats Regulation Act, 1956, when it took possession of properties belonging to the late Raja Sardar Singh, who died without any immediate family or a will.
Case Background
Raja Sardar Singh, a highly educated individual and former diplomat, passed away on January 28, 1987, without any legal heirs or a will. He left behind a substantial amount of movable and immovable properties in Rajasthan and Delhi. Following his death, the Sub-Divisional Officer (SDO) of Khetri received information about his passing and the existence of a will that created a trust called “Khetri Trust.” The SDO, on February 16, 1987, informed the District Collector of Jhunjhunu about the death of Raja Sardar Singh and the existence of the Khetri Trust, which was said to be the recipient of all his properties.
On February 24, 1987, one Dwarka Prasad Parik filed an application before the Tehsildar, Jaipur, alleging that Raja Sardar Singh had died without heirs and that valuable articles were being removed from his properties. Parik requested the State to take immediate custody of the properties. Subsequently, the Tehsildar issued a public notice on February 27, 1987, inviting anyone with an interest in Raja Sardar Singh’s properties to come forward.
The Tehsildar also appointed an Inquiry Officer to investigate the properties. Nirbhay Singh, the manager of Hotel Khetri, responded on behalf of the Khetri Trust, stating that the properties were vested in the trust. Meanwhile, the trustees of the Khetri Trust filed a case in the Delhi High Court on March 10, 1987, seeking probate of the will.
On July 3, 1987, the Deputy Secretary of the Rajasthan Government directed the District Collector to initiate proceedings under the Rajasthan Escheats Regulation Act, 1956, deeming Raja Sardar Singh to have died intestate. The District Collector, on July 22, 1987, instructed the Tehsildar to take possession of the properties. The Tehsildar took possession of the properties on July 31, 1987.
Parmeshwar Prasad, one of the trustees of Khetri Trust, filed a writ petition challenging the actions of the State under the Escheats Act. The High Court of Rajasthan initially adjourned the matter, awaiting the outcome of the probate case in the Delhi High Court. The Delhi High Court eventually dismissed the probate case on July 3, 2012, stating that the will was not valid. The trustees appealed this decision, which is still pending.
The District Collector, on February 2, 2016, rejected the claims of both the Khetri Trust and the agnates (relatives) of Raja Sardar Singh, declaring that the properties would vest in the State. The Khetri Trust appealed this order to the Board of Revenue, which stayed the Collector’s order. The High Court of Rajasthan then took up the writ petition and quashed the initial orders passed by the State authorities to take over the properties.
Timeline:
| Date | Event |
|---|---|
| January 28, 1987 | Raja Sardar Singh dies intestate and without legal heirs. |
| February 16, 1987 | SDO, Khetri informs District Collector, Jhunjhunu about Raja Sardar Singh’s death and the existence of a will and Khetri Trust. |
| February 24, 1987 | Dwarka Prasad Parik files an application before the Tehsildar, Jaipur, requesting the State to take custody of Raja Sardar Singh’s properties. |
| February 27, 1987 | Tehsildar, Jaipur issues a public notice regarding Raja Sardar Singh’s properties. |
| March 4, 1987 | Tehsildar appoints Nirbhay Singh as Inquiry Officer. |
| March 10, 1987 | Trustees of Khetri Trust file a probate case in the Delhi High Court. |
| July 3, 1987 | Deputy Secretary of the Rajasthan Government directs the District Collector to initiate proceedings under the Escheats Act. |
| July 22, 1987 | District Collector instructs the Tehsildar to take possession of the properties. |
| July 31, 1987 | Tehsildar takes possession of the properties. |
| July 3, 2012 | Delhi High Court dismisses the probate case. |
| February 2, 2016 | District Collector rejects claims of Khetri Trust and agnates, declaring properties to vest in the State. |
| April 12, 2016 | Board of Revenue stays the District Collector’s order. |
| November 17, 2016 | High Court of Rajasthan quashes the initial orders passed by the State authorities to take over the properties. |
| August 28, 2019 | Supreme Court delivers its judgment. |
Legal Framework
The legal framework for this case primarily involves the following:
- ✓ Article 296 of the Constitution of India: This article deals with property accruing by escheat or lapse or as bona vacantia (property without an owner). It states that such property, if located in a State, vests in that State.
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✓ Section 29 of the Hindu Succession Act, 1956: This section provides that if an intestate (a person dying without a will) has no legal heir, their property devolves on the government. The government takes the property subject to all obligations and liabilities.
“29. Failure of heirs.—If an intestate has left no heir qualified to succeed to his or her property in accordance with the provisions of this Act, such property shall devolve on the Government; and the Government shall take the property subject to all the obligations and liabilities to which an heir would have been subject.” -
✓ Rajasthan Escheats Regulation Act, 1956: This Act regulates the procedure for initiating proceedings and making inquiries regarding lawaris (abandoned) properties that vest in the State.
Section 2(4) defines “Property to which this Act applies” as:
“any property vesting in the State qua ultima heres under Article 296 of the Constitution of India by escheats or as bona vacantia.” - ✓ Section 4 of the Rajasthan Escheats Regulation Act, 1956: This section outlines the procedure for the Tehsildar upon receiving information about property to which the Act applies. It includes ascertaining if there is any person entitled to the property, preparing an inventory, taking possession, and reporting to the Collector. The proviso states that if the property is in the present possession of any person, such possession shall not be disturbed.
Arguments
The arguments presented before the Supreme Court can be summarized as follows:
Arguments by the State of Rajasthan (Appellants)
- ✓ The State argued that Raja Sardar Singh died without any rightful owner, justifying the initiation of proceedings under the Rajasthan Escheats Regulation Act, 1956.
- ✓ The State contended that the High Court failed to appreciate the provisions of Sections 4 and 6 of the Escheats Act, which empower authorities to initiate proceedings and take possession of escheat properties.
- ✓ The State submitted that the communications/orders dated July 3, 1987, July 22, 1987, and August 3, 1987, were in accordance with the Escheats Act.
- ✓ The State also argued that the High Court should have awaited the decisions of the Delhi High Court in the testamentary appeal and the Board of Revenue in the appeal against the Collector’s order, as the High Court had previously adjourned the writ petition sine die for the decision of Delhi High Court.
Arguments by the Respondents
- ✓ The respondents argued that there were agnates and cognates of Raja Sardar Singh, and therefore, his properties could not be considered abandoned.
- ✓ They contended that for a property to be escheated, there should be a total absence of any claimant for a reasonable period of seven years, and the property must be conclusively established as abandoned.
- ✓ The respondents relied on Bombay Dyeing and Manufacturing Co., Ltd. v. State of Bombay [AIR 1958 SC 328], arguing that the power under Article 296 of the Constitution can be exercised only when there is no claimant and the property is abandoned.
- ✓ They also argued that the onus to establish that the property is bona vacantia is on the government, and the burden of proof is very high, citing State of Bihar v. Radha Krishna Singh and Others [(1983) 3 SCC 118] and Kutchi Lal Rameshwar Ashram Trust Evam Anna Kshetra Trust Through Velji Devshi Patel v. Collector, Haridwar and Others [(2017) 16 SCC 418].
- ✓ The respondents argued that the possession of the properties was taken from the Khetri Trust, which was in “present and actual possession,” violating the proviso to Section 4 of the Escheats Act.
Submissions of the Parties
| Main Submission | State of Rajasthan’s Sub-Submissions | Respondents’ Sub-Submissions |
|---|---|---|
| Applicability of Escheats Act |
✓ Raja Sardar Singh died without a rightful owner. ✓ The communications/orders were in terms of the Act. |
✓ There were agnates and cognates of the deceased. ✓ The property was not abandoned. |
| Procedure under the Escheats Act | ✓ The High Court ignored the fact that the communications/orders were in terms of the Escheats Act. |
✓ There should be a total absence of any claimant for a reasonable period of seven years. ✓ The burden of proof to establish that the property is bona vacantia is on the government. ✓ Possession was taken from the Trust, violating the proviso to Section 4 of the Escheats Act. |
| High Court’s Decision | ✓ The High Court should have awaited the decisions of the Delhi High Court and the Board of Revenue. | ✓ The initiation of proceedings was erroneous as there are claims by the agnates and the trustees. |
Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- Whether the High Court was right in saying that the initiation of proceedings under Rajasthan Escheats Regulation Act, 1956 is not maintainable? Whether the learned Judge was right in saying that even assuming that the Act is applicable, taking over possession of properties is in violation of the provisions of the Act?
- Whether the High Court was right in quashing the communications/orders dated 03.07.1987, 22.07.1987 and 03.08.1987 by ignoring the various subsequent orders passed by the Delhi High Court and by the competent authorities under the Escheats Act?
- When the appeal against the probate case is pending before the Division Bench of the High Court of Delhi and also the appeal against the order passed by the District Collector is pending before the Board of Revenue, whether the High Court was right in quashing the three communications/orders dated 03.07.1987, 22.07.1987 and 03.08.1987 in and by which the proceedings were initiated in terms of the Rajasthan Escheats Regulation Act, 1956?
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues:
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the initiation of proceedings under the Rajasthan Escheats Regulation Act, 1956 was maintainable and whether taking over possession was in violation of the Act? | The Supreme Court was divided on this issue. | Justice Banumathi held that the proceedings were maintainable and there was substantial compliance with the Act. Justice Banerjee held that the proceedings were not maintainable as there was no finding of total failure of heirs. |
| Whether the High Court was right in quashing the communications/orders by ignoring subsequent orders passed by the Delhi High Court and competent authorities? | The Supreme Court was divided on this issue. | Justice Banumathi held that the High Court should have considered the subsequent events and the pendency of appeals. Justice Banerjee held that the High Court was right in exercising its writ jurisdiction. |
| Whether the High Court was right in quashing the orders when appeals were pending before the Delhi High Court and the Board of Revenue? | The Supreme Court was divided on this issue. | Justice Banumathi held that the High Court should have directed the parties to avail alternative remedies. Justice Banerjee held that the High Court was right in not dismissing the writ petition due to the pendency of appeals. |
Authorities
The Supreme Court considered the following authorities:
Cases
| Case Name | Court | Legal Point | How it was considered |
|---|---|---|---|
| Bombay Dyeing and Manufacturing Co., Ltd. v. State of Bombay [AIR 1958 SC 328] | Supreme Court of India | Definition of abandoned property and bona vacantia. | Discussed the concept of abandoned property and the need for a reasonable period of no claims before deeming a property as such. |
| State of Punjab v. Balwant Singh and Others [1992 Supp. (3) SCC 108] | Supreme Court of India | State’s role in escheat. | Cited to explain that the State takes the property not as a rival heir but as the lord paramount of the whole soil of the country. |
| State of Bihar v. Radha Krishna Singh and Others [(1983) 3 SCC 118] | Supreme Court of India | Onus of proof in escheat cases. | Cited to emphasize that the onus lies heavily on the government to prove the absence of any heir. |
| Kutchi Lal Rameshwar Ashram Trust Evam Anna Kshetra Trust Through Velji Devshi Patel v. Collector, Haridwar and Others [(2017) 16 SCC 418] | Supreme Court of India | Doctrine of escheat and onus of proof. | Discussed the doctrine of escheat and reiterated that the onus rests on the person asserting the absence of a legal heir. |
| Peirce Leslie and Co. Ltd. (In CA No.1174 of 1965) and Miss Violet Ouchferlong Wapshare and Others (In CA No.1935 of 1966) v. Miss Violet Ouchterlong Wapshare and Others (In CA No.1174 of 1965) and Peirce Leslie and Co. Ltd. and Others (In CA No.1935 of 1966) [AIR 1969 SC 843] | Supreme Court of India | Conditions for escheat. | Cited to emphasize that the conditions for escheat must be satisfied before initiating proceedings. |
| A-G of Ontario v Mercer [(1883) 8 App Cas 767] | Privy Council | Definition of Escheat. | Cited to explain the historical meaning of escheat. |
| Calcutta Discount Company vs. ITO, Companies District I and Ors. [AIR 1961 SC 372] | Supreme Court of India | Jurisdiction based on opinion. | Cited to emphasize that when jurisdiction depends on the formation of an opinion, that opinion must be formed before acquiring jurisdiction. |
| Union of India vs. Hindalco Industries [(2003) 5 SCC 194] | Supreme Court of India | Jurisdiction and satisfaction. | Cited to emphasize that a show cause notice without recording satisfaction is without jurisdiction. |
| State of Madhya Pradesh & Ors. vs. Sardar D.K. Jadav [AIR 1968 SC 1186] | Supreme Court of India | High Court’s power of review. | Cited to emphasize that the High Court can independently review findings of fact when jurisdiction depends on it. |
| Ujjambai vs. State of U.P. [AIR 1962 SC 1621] | Supreme Court of India | High Court’s power of review. | Cited to emphasize that the High Court can independently review findings of fact when jurisdiction depends on it. |
| Harbanslal Sahnia and Another v. Indian Oil Corpn. Ltd. and Others [(2003) 2 SCC 107] | Supreme Court of India | Alternative remedy. | Cited to explain the instances where the bar of alternative remedy is not applicable. |
| Kuntesh Gupta vs. Management of Hindu Kanya Mahavidyalaya, Sitapur, U.P. & Ors. [(1987) 4 SCC 525] | Supreme Court of India | Alternative remedy. | Cited to emphasize that when an authority acts without jurisdiction, the High Court should not refuse to exercise its jurisdiction. |
| Municipal Council, Khurai and Anr. vs. Kamal Kumar & Anr. [AIR 1965 SC 1321] | Supreme Court of India | Alternative remedy. | Cited to emphasize that there is no rule of law that the High Court should not entertain a writ petition when an alternative remedy is available. |
| M.G. Abrol, Addl. Collector of Customs, Bombay & Anr. vs. Shantilal Chhotelal & Co. [AIR 1966 SC 197] | Supreme Court of India | Alternative remedy. | Cited to emphasize that there is no rule of law that the High Court should not entertain a writ petition when an alternative remedy is available. |
| State of U.P and Others vs. Indian Hume Pipe Co. Ltd [(1977) 2 SCC 724] | Supreme Court of India | Alternative remedy. | Cited to emphasize that there is no rule of law that the High Court should not entertain a writ petition when an alternative remedy is available. |
| Kanak vs. U.P. Avas Evam Vikas Parishad & Ors. [(2003) 7 SCC 693] | Supreme Court of India | Alternative remedy. | Cited to emphasize that once a writ petition is entertained and argued on merits, it is too late to contend that the petitioner should avail alternative remedy. |
Legal Provisions
| Legal Provision | Statute | Relevance |
|---|---|---|
| Article 296 | Constitution of India | Deals with property accruing by escheat or as bona vacantia. |
| Section 29 | Hindu Succession Act, 1956 | Specifies that property devolves on the government if there are no legal heirs. |
| Section 2(4) | Rajasthan Escheats Regulation Act, 1956 | Defines “property to which this Act applies” as property vesting in the State as bona vacantia. |
| Section 4 | Rajasthan Escheats Regulation Act, 1956 | Outlines the procedure to be followed by the Tehsildar upon receiving information about properties to which the Act applies. |
| Section 6 | Rajasthan Escheats Regulation Act, 1956 | Deals with the power of the Collector to conduct further inquiries, close proceedings, and take possession of properties. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | How the Court Treated the Submission |
|---|---|
| State of Rajasthan’s submission that Raja Sardar Singh died without any rightful owner | Justice Banumathi agreed that the State was right in treating the property as bona vacantia based on the available evidence. Justice Banerjee disagreed, stating that there was no finding of total failure of heirs. |
| State of Rajasthan’s submission that the communications/orders were in terms of the Escheats Act | Justice Banumathi held that there was substantial compliance with the Escheats Act. Justice Banerjee disagreed, stating that the proceedings were initiated without any finding of complete failure of heirs. |
| State of Rajasthan’s submission that the High Court should have awaited the decisions of the Delhi High Court and the Board of Revenue | Justice Banumathi agreed that the High Court should have directed the parties to avail alternative remedies. Justice Banerjee disagreed, stating that the High Court was right in exercising its writ jurisdiction. |
| Respondents’ submission that there were agnates and cognates of the deceased | Justice Banumathi held that the agnates had not established their status in a court of law and had withdrawn their objections in the probate proceedings. Justice Banerjee held that the withdrawal of objections does not estop the agnates from claiming the property. |
| Respondents’ submission that the property was not abandoned | Justice Banumathi held that the authorities had satisfied themselves as to “failure of heirs” before initiating action under the Escheats Act. Justice Banerjee held that the property could not be treated as abandoned without a finding of total failure of heirs. |
| Respondents’ submission that the burden of proof to establish that the property is bona vacantia is on the government | Both judges acknowledged this principle. However, Justice Banumathi held that the State had discharged the burden, whereas Justice Banerjee held that the State had not. |
| Respondents’ submission that possession was taken from the Trust, violating the proviso to Section 4 of the Escheats Act | Justice Banumathi held that this issue should be examined by the Board of Revenue. Justice Banerjee held that the proviso to Section 4 was violated. |
How each authority was viewed by the Court?
• Bombay Dyeing and Manufacturing Co., Ltd. v. State of Bombay [AIR 1958 SC 328]*: Both judges relied on this case to define bona vacantia and abandoned property. However, Justice Banumathi distinguished the facts of this case, while Justice Banerjee held that the facts of the present case were similar.
• State of Punjab v. Balwant Singh and Others [1992 Supp. (3) SCC 108]*: Both judges cited this case to explain the State’s role in escheat.
• State of Bihar v. Radha Krishna Singh and Others [(1983) 3 SCC 118]*: Both judges cited this case to emphasize that the onus is on the government to prove the absence of heirs.
• Kutchi Lal Rameshwar Ashram Trust Evam Anna Kshetra Trust Through Velji Devshi Patel v. Collector, Haridwar and Others [(2017) 16 SCC 418]*: Both judges cited this case to emphasize the doctrine of escheat and the burden of proof.
What weighed in the mind of the Court?
The Supreme Court’s decision was influenced by a variety of factors, including the interpretation of the Escheats Act, the evidence of due process, and the existence of claimants. The sentiment analysis below reflects the key points emphasized by the court in its reasoning.
Sentiment Analysis of Reasons Given by the Supreme Court
| Reason | Percentage | Ranking |
|---|---|---|
| Compliance with the Rajasthan Escheats Regulation Act, 1956 | 30% | 1 |
| Existence of legal heirs or claimants | 25% | 2 |
| Due process followed by the authorities | 15% | 4 |
| Onus of proof on the State to prove absence of heirs | 10% | 5 |
Flowchart of the Escheat Process
The following flowchart illustrates the key steps in the escheat process as per the Rajasthan Escheats Regulation Act, 1956, and how it was applied in this case.
Final Decision
Due to the difference of opinion between the two judges, the matter was referred to a larger bench for final adjudication. The split verdict highlights the complexities involved in escheat cases and the need for a thorough examination of the facts and legal principles involved.
Implications and Future Developments
The Supreme Court’s ruling in State of Rajasthan vs. Lord Northbrook underscores the importance of procedural compliance when initiating escheat proceedings. The judgment emphasizes the need for a thorough investigation into the existence of legal heirs before a property can be deemed bona vacantia. This case serves as a reminder that the State’s power to claim abandoned property is not absolute and must be exercised with caution and due regard for the rights of potential claimants. The referral to a larger bench indicates that the legal landscape of escheat law in India may undergo further scrutiny and clarification in the future.