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Sale of 'enemy shares': Those who fled to Pakistan left behind a treasure trove for govt to bankroll infrastructure projects

When the war broke out with Pakistan in 1965, many from India fled to Pakistan---most of them presumably Muslims even though at last count Pakistan had some one lakh Hindus. Many of them left behind both movable and immovable properties back in India. The Narendra Modi government has decided to put this small treasure trove to use.

To start with, it has decided to sell the shares in Indian companies left behind by those who migrated to enemy countries. The Pakistani nationals in the hit list number 9,280. Similarly, when China attacked India in 1962, quite a few fled to China. The Chinese nationals in the hit list number just 126.

The government in 1968 enacted a law called the Enemy Property Act to regulate such properties and entrusted them with the Custodian of Enemy Property (CEP). After a lot of either vacillation or passivity by previous governments, the Modi government has decided to bell the cat---put them to use. It has also ended the vexed possibility of challenge and claim from legal heirs by enacting Enemy Property (amendment and validation) Act 2017. Thanks to this amendment, enemy property includes even the property lawfully transferred by the ‘enemy’ (the fleeing citizen) to his/her legal heir or successor before migrating to Pakistan or China.

To wit, let us say a person transferred his property to his son in 1963 and migrated to Pakistan during the war in 1965. Now thanks to this amendment to the Act, the property transferred by this person before migrating, now owned by his son, also falls under the definition of ‘enemy property’ and can be confiscated.

While the total value of the treasure trove is estimated to be Rs 1 lakh crore, the Modi government is plucking the low hanging fruits first. It expects to garner some Rs 3,000 crore from the enemy shares which it would put to productive use---bankroll social infrastructure projects.

Representational image. Reuters

Representational image. Reuters

The property now approved for sale consists of about 6.5 crore shares which are under the custody of CEP belonging to 20,323 shareholders in 996 companies of which 588 companies are currently functional and 139 are listed on stock exchanges. The listed ones obviously would be easier to realize. The unlisted shares would be relatively difficult to sell because they will have to be independently valued first.

Soon,  it is possible that the government might lay its eager hands on enemy immovable properties as well. In fact, the total expected booty of Rs 1 lakh crore is basically premised on huge realisations from immovable properties. It is not as if the Indian government has blazed a trail with the enemy property law. There is a precedent and parallel. During World War II, the US and the UK took over the properties of people who fled their shores to settle in ‘enemy’ countries such as Germany and Japan. This was rationalised as a move to protect their turf from hostile forces in enemy States who might take control of such assets and use it to their advantage.

The moral of the story is that people who flee a country should take along with them their properties. While gold and jewelry could have been taken to Pakistan and China, shares even if taken would not have helped them because shares irrespective of where they are kept belong to the nation where they are registered. By the way, for the statistically inclined, Uttar Pradesh with 4,991 properties tops the list of properties left behind by the now-Pakistani nationals, followed by West Bengal with 2,735 properties. They would feel more the heat of the Modi government move.

(The author is a senior columnist and tweets @smurlidharan)


Updated Date: Nov 15, 2018 11:28 AM

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