Part XII: Finance, Property, Contracts and Suits

Article 296: Property Accruing by Escheat or Lapse

Original Article:

Subject as hereinafter provided, any property in the territory of India which, if this Constitution had not come into operation, would have accrued to His Majesty or, as the case may be, to the Ruler of an Indian State by escheat or lapse, or as bona vacantia for want of a rightful owner, shall, if it is property situate in a State, vest in such State, and shall, in any other case, vest in the Union:

Provided that any property which at the date when it would have so accrued to His Majesty or to the Ruler of an Indian State was in the possession or under the control of the Government of India or the Government of a State shall, according as the purposes for which it was then used or held were purposes of the Union or of a State, vest in the Union or in that State.

Explanation.—In this article, the expressions “Ruler” and “Indian State” have the same meanings as in article 363.

Explanations:

Article 296 addresses the vesting of property in the Union or States when no rightful owner exists. This includes property that would have otherwise reverted to the British Crown or princely rulers under colonial laws.

Key Provisions:

Vesting of Property by Escheat or Lapse

If property lacks rightful ownership and is located in a State, it will vest in that State. If it is not specific to any State, it will vest in the Union.

Proviso: Possession or Control

The proviso ensures that property in use by the Government of India or State Governments will continue to vest with the appropriate authority based on its purpose at the time of possession.

Explanation of Terms

The terms “Ruler” and “Indian State” align with the definitions provided in Article 363, ensuring historical context is preserved.

Real-Life Examples:

An example includes properties left behind by princely rulers without heirs, which were absorbed into State or Union ownership depending on their location and use.

Amendments:

Although Article 296 has not been amended, its principles have been applied in various cases involving unclaimed property across India.

Historical Significance:

This Article ensured a seamless transfer of unclaimed property from colonial and princely rule to the Indian Union or States, strengthening administrative clarity.

Debates and Deliberations:

Dr. B.R. Ambedkar highlighted the necessity of Article 296, stating that it was crucial to establish a clear framework for handling properties without rightful owners. He explained that such provisions were essential to avoid disputes and to ensure that these properties served public or administrative purposes.

Shri H.V. Kamath raised concerns regarding the possibility of disputes between the Union and States over escheated properties. He proposed a system of arbitration to resolve conflicts that might arise over jurisdiction or usage of such properties.

Prof. Shibban Lal Saksena proposed that the Article should mandate better documentation and tracking of unclaimed properties to prevent misuse or loss of assets. While the proposal was not incorporated directly, it influenced subsequent administrative practices for recording escheated properties.

Shri T.T. Krishnamachari supported the Article, emphasizing its importance in maintaining the administrative continuity of property management after independence. He pointed out that such provisions were standard in many nations transitioning from colonial rule.

Further, there was a discussion about the historical relevance of bona vacantia under British law and how its principles were adapted for the Indian federal structure. Members debated whether certain provisions needed to be more specific to prevent ambiguity in cases involving inter-state properties.

References:

• Constitution of India: Full text and analysis of Article 296.
• Constituent Assembly Debates: Discussions on escheat and lapse.