Part XII: Finance, Property, Contracts and Suits

Article 294: Succession to Property

Original Article:

As from the commencement of this Constitution—

(a) all property and assets which immediately before such commencement were vested in His Majesty for the purposes of the Government of the Dominion of India and all property and assets which immediately before such commencement were vested in His Majesty for the purposes of the Government of each Governor’s Province shall vest respectively in the Union and the corresponding State, and

(b) all rights, liabilities and obligations of the Government of the Dominion of India and of the Government of each Governor's Province, whether arising out of any contract or otherwise, shall be the rights, liabilities and obligations respectively of the Government of India and the Government of each corresponding State, subject to any adjustment made or to be made by reason of the creation before the commencement of this Constitution of the Dominion of Pakistan or of the Provinces of West Bengal, East Bengal, West Punjab and East Punjab.

Explanations:

Article 294 of the Indian Constitution addresses the transfer of property, assets, rights, liabilities, and obligations from the colonial administration to the Indian Union and the states after independence. It lays down provisions for the vesting of assets and rights previously held by the British Crown in the newly established Union and State governments.

Key Provisions:

Clause (a): Vesting of Property and Assets

This clause transfers ownership and control of assets—such as land, buildings, and financial resources—from colonial authorities to the Indian government structure.

Clause (b): Succession of Rights, Liabilities, and Obligations

This clause ensures the inheritance of rights, liabilities, and obligations of the former Dominion of India and Governor's Provinces.

Real-Life Examples:

An example would be the transfer of government buildings in Delhi, previously used by the British administration, to the Indian Government.

Amendments:

Although Article 294 itself has not been amended, administrative adjustments were necessary due to political reorganization after the Partition of India.

Historical Significance:

By transferring all necessary assets and legal rights to the Indian Union and States, Article 294 ensured stability and continuity in governance during India's transition to a democracy.

Debates and Deliberations:

The Constituent Assembly's debate on Article 270 (later renumbered as Article 294) focused on ensuring seamless succession to property, rights, and liabilities.

Dr. B.R. Ambedkar emphasized that Article 270 was essential to provide a legal framework for transferring assets and obligations from the British Crown to the Indian Union and States. He stated, "Without such a provision, the administrative framework could face disruption during the transition."

Shri Alladi Krishnaswami Ayyar supported the article and highlighted the need for adjustments, especially in areas affected by the Partition, to ensure equitable distribution of assets.

Shri S.V. Krishnamoorthy Rao pointed out the importance of clarifying the legal framework to avoid disputes over property ownership between the Union and States.

In response to concerns about overseas assets held by the British Crown, Dr. Ambedkar assured that ongoing negotiations would address these issues. "The Sterling Balances and other overseas assets require careful handling, but this article secures internal assets effectively," he added.

References:

• Constitution of India: Full text and analysis of Article 294.
• Constituent Assembly Debates: Discussions on asset succession.
• Partition Documents: Agreements on property distribution between India and Pakistan.