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To boost disinvestment receipts, Modi govt is using wartime law to sell ‘enemy property’

‘Enemy’ property belonging to citizens of Pakistan and China will be sold for revenue. And a problematic amendment to a wartime act in 2017 will help Modi govt do it.

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The Indian economy is facing a serious crisis, and no matter what the Narendra Modi government says about it, or does not say, the recent government order to auction 9,400 ‘enemy properties’ worth Rs 1 lakh crore is enough proof. It’s an attempt to boost disinvestment receipts, along with the sale of Air India. But it can also lead to a troubling fallout – branding Muslim citizens as an ‘enemy’ in the current climate.

These ‘enemy properties’ belong to those who have taken citizenship of Pakistan and China. In fact, ‘enemy property’ is property belonging to the people who are citizens of a nation with which the nation in which they reside is at war. But the current sale announcement raises serious concerns especially at a time when India is not at war with any country.

A Group of Ministers (GoM) headed by Home Minister Amit Shah will monitor this disposal under the Enemy Property Act.

Last year as well, on 8 November, the Modi government decided to sell ‘enemy’ shares for a mere Rs 3,000 crores and boost disinvestment receipts. In 2018, it ended up selling Rs 779 crore-worth of shares. The proceeds went to the Ministry of Finance. The shares belonged to 996 companies, of which 588 were functional.

An alternative mechanism available to the finance minister was to use proceeds for social welfare programmes.


Also read: ‘Hindus aren’t our enemies’ — why final NRC is not what BJP promised and envisioned


Several ambiguities

At the outset, it seems controversial that the confiscated enemy property is not a public sector enterprise waiting to be divested, and yet the proceeds from the sale of shares were deposited as disinvestment proceeds in the government account maintained by Ministry of Finance.

Further, there was ambiguity about the health of 588 out of 996 companies, which are functional. We don’t know whether they were sick units or yielding profits. In case of the latter, there seems to be no justification for such kind of disinvestment.

The government claims that the objective of such a sale is the prosperity of the people of India, who will be the direct recipients of the developmental and social welfare programmes of the government.

In reality, this confiscation and sale of enemy property will have adverse ramifications on property and citizenship rights of Indians.

In order to understand the repercussions of the proposed sale, we need to look at the fraudulent amendment to the Enemy Property Act in 2017 by the Narendra Modi government.


Also read: Rampur issues notice to 28 people for property damages worth Rs 25 lakh during CAA protests


Making of an enemy

The Enemy Property Act of 1968 was amended to The Enemy Property (Amendment and Validation) Act in March 2017. It changed the definition of both ‘Enemy’ as well as ‘Enemy Property’.

This amendment allows the government to confiscate the property held by citizens of India whose ancestors may have migrated to Pakistan or China.

After Partition, hundreds of homes were vacated voluntarily or involuntarily by Muslims. These were considered abandoned and used by Hindu and Sikh refugees coming from Pakistan. The occupation sparked further violence in Punjab, prompting a discussion in the Joint Defence Council in Lahore on 29 August 1947 and creation of an office of ‘Custodian of Refugee’s Property’, which soon changed into the office of the ‘Custodian of Evacuee Property’. The conversion of ‘refugee property’ to ‘evacuee property’ made the displacements permanent. Ordinances and counter-ordinances continued to the passed in quick succession on both sides of the border. Soon, the category of ‘intended evacuee’ emerged and the property of persons who were getting ready to migrate was confiscated even before their migration.

After the 1962 war, Defence of India Act and Defence of India Rules defined ‘enemy’ and ‘enemy territory’ for the first time. By 1968, the Enemy Property Act was enacted, expanding the definition of ‘enemy’ from a war-waging state to one that includes persons belonging to the enemy state. So, Chinese and Pakistani nationals not having citizenship of India were deemed as enemies and the property held by them was considered ‘enemy property’. Moreover, public interest was invoked to vest the central government with additional powers while retaining the option of legal remedy for the original occupant.

In 1980, there were 389 enemy properties in India. In 2010, an ordinance was passed that held that properties would continue to be vested with custodians even after the death of the enemy despite the legal heirs being Indian citizens. By 2011, there were 2,111 enemy properties, 12,090 by 2014, which further increased to 15,143 by 2016. While the custodian was empowered to divest the immovable property, civil courts continued to retain the power to decide whether a particular property was in fact an enemy property.


Also read: Protection of land rights, internet, Bollywood — what BJP ministers are promising Kashmiris


Unprecedented powers

The definition of enemy in the amended Enemy Property Act, 2017 now includes legal heirs even if they are citizens of India; enemy firms that may be succeeded/partnered by citizens of India or of counties that are not considered enemy; and firms that have changed their nationality. Such enemy property is vested with the custodian (appointed by the central government) who is now additionally provided with the sweeping powers of the civil courts to do the following: “(i) discovery and inspection of documents; (ii) summoning persons; (iii) calling for documents; and (iv) examining witnesses and document”.

Moreover, the custodian is empowered to evict enemies deemed as unauthorised occupants/trespassers, and is no longer bound to financially maintain the enemy or their family in India.

The custodian can collect rent, licence fee and other charges accrued from the property, remove unauthorised construction, and sell the property and deposit the revenue in the Consolidated Fund of India. This amendment is effective retrospectively from 1968. All transfers, divestments and legal adjudications before this amendment have, therefore, been rendered invalid.

In his speech in Parliament on 10 March, then finance minister Arun Jaitley had explained the urgency and rationale for the amendment with indirect references to the controversial Mahmudabad case. His argument invoked the security and integrity of India, nationalism and reciprocity towards enemy nation. However, the potential implications of the amendment go beyond just one case.

Based on valuation of enemy properties across 19 states of India, the ministry explained that the implementation of the amendment was expected to accrue revenue of more than Rs 1 lakh crore for the government.


Also read: Gujarat’s Dalits & tribals are getting back land they have so far owned only on paper


An excuse

The new amendment to the Enemy Property Act will have a detrimental effect on a large number of Indian citizens of Pakistani or Chinese origin. In most cases, even if the persons are of Indian origin and citizens of India, they will be deemed as an ‘enemy’ due to migration of their ancestors.

The negative repercussions will not be restricted to citizens being labelled as enemies, but will also provide legal sanction to the already vitiated social narrative of pronouncing Muslims as enemies/anti-nationals. The Muslim community of India, which lacks economic and employment opportunities, is likely to be further marginalised with confiscation of property rights by the state. And Muslim women will especially feel the brunt.

This kind of seizure of property excuses the Modi government from paying any compensation to the property owners. It takes away the possibility of holdout by the citizens and even denies legal recourse to the expropriation of property rights. It is apparent that the redistribution of usurped property rights will happen in favour of the interest groups concentrating wealth in the hands of the rich.

Undoubtedly, the Modi government wants to pursue its Hindutva agenda, whereby the ‘free rider’ problem will be reduced because the individuals will not want to violate the rules that are now placed at a high-level in his ideological faith. By avoiding litigation, the state has ensured reduction of transaction cost for itself as well.

Unfortunately, the cost borne by society would increase manifold. The confiscation of property without just compensation and no well-defined public purpose may become a precedent for future legislations that may concentrate property rights in the hands of the state, making it all-powerful in the guise of democracy.

The author is an Associate Professor (Economics) at Jindal Global Law School, O.P. Jindal Global University. Views are personal.

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2 COMMENTS

  1. How preconceived aim distorts a narrative – this article is an example of that.
    Clear reading if the law tells you that it pertains to the ‘properties’ & NOT to any Indian citizen. The part where inheritors were divested of rights on enemy properties was done way back in 1968.
    Aim of the author is obviously to rouse passions of Muslim community by falsely implicating that the amendment would make enemies out of muslims.
    Indians, including muslims, are able to see through these manipulative narratives and will not fall for them any more.
    The LeftLib has lost the battle !

  2. Partition hue ek zamaana guzar gaya. The subcontinent should have moved on, as the continent of Europe did, resolving never to let hate, prejudice and enmity overpower the possibility of cooperation and integration. An India mired in the past and petty regional conflicts can never take its rightful place as one of the great civilisational powers of the world.

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