Mechanism for Sale of Enemy Property Gets Cabinet Nod

Movable Enemy Property lying dormant for decades can now be monetized and sale proceeds therefrom may be used for development and social welfare programmes as the Union Cabinet chaired by Prime Minister Narendra Modi has approved the mechanism and procedure for sale of the enemy shares on Thursday 8 November 2018.

Enemy Property refers to any property belonging to, held or managed on behalf of an enemy, an enemy subject or an enemy firm, according to Enemy Property Act, 1968. Enemy properties are those abandoned properties which the government took over when their owners chose to leave India and move to Pakistan and China after Partition and the 1965 and 1971 wars. Some properties, including companies’ shares belonging to nationals of Pakistan, were tagged by the Indian government as enemy properties during the wars in 1962, 1965 and 1971 and vested with CEPI. The current price of enemy shares vested in the Custodian of Enemy Property of India (CEPI) is estimated at around 3000 crore.

Enemy Property Act, 1968 is an Act of the Parliament of India, which provides for the continuous vesting of enemy property in the CEPI. This Act was enacted soon after the 1965 war to tackle the growing list of abandoned buildings and their encroachment. The central government through the CEPI is in possession of enemy properties spread across many states in the country. The Act provides for continued vesting of enemy property vested in the CEPI under the Defence of India Rules, 1962 and the Defence of India Rules, 1971, (w.e.f. 27.09.1997). In the Enemy Property Act of 1968, the definition of “enemy” was as follows:

Enemy” or “enemy subject” or “enemy firm” means a person or country who or which was an enemy, an enemy subject or an enemy firm, as the case may be, under the Defence of India Act and Rules, but does not include a citizen of India.

In the amendment of 2017, this was substituted by “…. including his legal heir or successor, whether or not citizen of India or the citizen of a country which is not an enemy or the enemy….. who has changed his nationality”.

An enabling legislative provision was created for the disposal of enemy property with the amendment of 2017. CEPI has been empowered for sale of enemy property through an amendment to this Act, vide Section 8A. Further,

“ Notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority or any law for the time being in force, the Custodian may, within such time as may be specified by the Central Government in this behalf, dispose of whether by sale or otherwise, as the case may be, with prior approval of the Central Government, by general or special order, enemy properties vested in him immediately before the date of commencement of the Enemy Property (Amendment and Validation) Act, 2017 in accordance with the provisions of this Act, as amended by the Enemy Property (Amendment and Validation) Act, 2017”.

 According to amendment, as in sub-section 7 of section 8A of the Enemy Property Act, 1968, Central Government may direct that disposal of enemy property shall be made by any other authority or Ministry or Department instead of Custodian.

Enemy shares held under the Custody of Ministry of Home Affairs/ Custodian of Enemy Property of India (CEPI), as per sub-section 1 of section 8A of the Enemy Property Act, 1968 can now be sold by the Department of Investment and Public Asset Management under the provisions of sub-section 7 of section 8A of the Enemy Property Act, 1968, as per the ‘In principle’ approval that has been accorded by the Union Cabinet.

Sale proceeds are to be deposited as disinvestment proceeds in the Government Account maintained by Ministry of Finance.

With the approval, now, of the procedure and mechanism for sale of enemy shares an enabling framework has been institutionalized for their sale.

  • A total number of 65075877 shares in 996 companies of 20323 shareholders are under the custody of CEPI.
  • Of these 996 companies, 588 are functional/ active companies, 139 of these are listed with remaining being unlisted.
  • The process for selling these shares is to be approved by the Alternative Mechanism (AM) under the Chairmanship of Finance Minister and comprising Minister of Road Transport and Highway and Home Minister.
  • The AM will be supported by a High Level Committee (HLC) of officers co-chaired by the Secretary, DIPAM and Secretary, MHA (with representatives from DEA, DLA, M/o Corporate Affairs and CEPI) that would give its recommendations with regard to quantum, price/price-band, principles/ mechanisms for sale of shares, etc.
  • Before initiation of sale of any Enemy Shares, the CEPI shall certify that the sale of the Enemy Shares is not in contravention of any judgment, decree or order of any court, tribunal or other authority or any law for the time being in force and can be disposed of by the Government.
  • The advisors/ intermediaries like Merchant Bankers, Legal Adviser, Selling Brokers etc. as may be required for the disposal of movable enemy property, will be appointed by DIPAM through an open tender/limited tender process.
  • An Inter-Ministerial Group (IMG) will guide the process of sale.

There are 9547 enemy properties, having estimated worth of more than 1.1 lakh crore, scattered in important cities such as Mumbai, Delhi, Kolkata, Bhopal, Hyderabad and Lucknow etc., according to a top government source.

 “There are court cases pending against 1215 properties. Most of the other properties are under illegal possession and occupation at prime locations in key cities, and can be used to serve government needs that are falling short of space in premium locations.”

The government has also reportedly taken possession of 31 such properties and decided to give their possession to the Central Reserve Police Force and Border Security Force facing space crunch for their offices.


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