Custodian Cannot Declare Property As 'Enemy Property' Based On Mere 'Ipse Dixit' Without Inquiry And Notice: Bombay High Court

"Property held by any person or institution cannot be encumbered by treating the same as Enemy Property based on mere ipse dixit of the Custodian, that too, by issuing ex-parte orders/directions." Bombay High Court, in a significant ruling, held that immovable properties do not automatically vest in the Custodian of Enemy Property for India without a formal inquiry, notice to the affected parties, and a formal declaration under the Enemy Property Act, 1968.

A division bench comprising Justice Suman Shyam and Justice Shyam C. Chandak observed that the Custodian cannot direct revenue authorities to mutate records based on mere assumptions while acting in flagrant violation of the principles of natural justice.

The dispute pertains to properties belonging to a 'Wakf-al-aulad' created by Khan Bahadur Haji Shaikh Meherbaksh in 1926. Though some beneficiaries of the Wakf had migrated to Pakistan, their financial shares were settled in 1986, and the Custodian had issued a 'No Objection Certificate' in 2007, subsequently withdrawing earlier notices. However, in 2021 and 2023, the Custodian issued fresh orders directing the Collector to record the lands as 'Enemy Property' in the revenue records, prompting the present purchasers and Mutawallis to approach the High Court.

The primary question before the court was whether the Wakf properties automatically vested in the Custodian of Enemy Property by operation of law, even without a formal notification or declaration. The court was also called upon to determine whether the Custodian's ex-parte communications directing mutation of revenue records were legally sustainable, and whether Section 22A of the Enemy Property (Amendment) Act, 2017 would nullify a previous consent order of the High Court.

No Automatic Vesting Without Inquiry

The court outrightly rejected the Custodian's argument that once an enemy interest is detected in a property, its vesting is automatic by operation of law. The bench clarified that while statutory vesting of enemy property is contemplated under the Act, it is strictly contingent upon the fulfillment of statutory conditions under Sections 2(b) and 2(c) of the 1968 Act. The court observed that such vesting takes effect only after the Custodian makes a formal declaration upon conducting a necessary verification and recording a prima facie satisfaction that the property is indeed enemy property.

Compliance With Natural Justice Is Mandatory

Emphasizing that civil consequences arise from such declarations, the bench ruled that an inbuilt requirement of natural justice exists within the Enemy Property Act. The court noted that even in the absence of a specifically prescribed procedure for certain actions under the 1968 Act, the Custodian must scrupulously adhere to the principles of natural justice. The bench firmly recorded that property cannot be encumbered or taken over based on ex-parte directions without granting the affected owner or possessor a proper opportunity to be heard.

Statutory Procedure Under 2015 Rules Must Be Followed

The High Court placed heavy reliance on the Enemy Property Rules, 2015, specifically Rules 3 and 4, which lay down the operational mechanics for the identification and verification of enemy property. The bench observed that upon identifying a property, the Custodian is mandated to serve a notice upon the person claiming title and seek a show-cause response before declaring it as enemy property. Relying on the precedent set in Lotus Classique Housing Society Vs. Union of India, the court noted that it is only after completing this exhaustive procedure and issuing a certificate under Section 5A of the Act that the Custodian can instruct the Collector to make mutation entries.

"The power of the High Court in exercise of writ jurisdiction cannot be circumscribed or excluded by statute... Section 22A(b) cannot have the effect of wiping out or nullifying the order of the High Court passed in exercise of writ jurisdiction."

Section 22A Does Not Nullify High Court's Writ Jurisdiction

The Custodian had vehemently argued that Section 22A(b) of the Enemy Property (Amendment) Act, 2017, provides the statute an overriding effect over any judgment, decree, or order of any court. The bench rejected this contention on two primary grounds. Firstly, the court noted that since the property never validly vested in the Custodian, the question of the Custodian being divested of it did not arise. Secondly, the bench declared that the expressions 'judgment', 'decree', or 'order' of a 'court' under Section 22A cannot be interpreted to include an order passed by the High Court in the exercise of its extraordinary writ jurisdiction under Article 226 of the Constitution of India.

Alternative Remedy Not An Absolute Bar

Addressing the objection that the petitioners should have availed the statutory appeal mechanism under Section 18 of the 1968 Act, the court reiterated that the doctrine of alternative remedy is a rule of prudence, not an absolute statutory bar. Relying on the Supreme Court's ruling in Whirlpool Corporation versus Registrar of Trade Marks, Mumbai, the bench held that the High Court can rightfully entertain a writ petition when the authority has purported to usurp jurisdiction without any legal foundation. The court noted that the Custodian's actions were ex-facie in complete contravention of the 1968 Act and in flagrant violation of the division bench's 2007 consent order.

Concluding that there was never any valid vesting of the Wakf properties in the Custodian at any point in time, the High Court held that the Custodian lacked the jurisdiction and authority to issue the impugned communications. Consequently, the court set aside the communications and mutation entries declaring the properties as enemy property, allowing all the connected writ petitions.

Date of Decision: 22nd July 2026