Saif Ali Khan May Lose Rs 15,000 Crore Worth Of ‘Enemy Property’: What Is Enemy Property, And How Is It Settled?

Following a knife attack, Bollywood actor Saif Ali Khan may face another shocking blow, not a physical one this time, but a financial setback. The actor risks losing properties worth Rs 15,000 crore, inherited from his ancestors who once ruled Bhopal before India's independence. The property has been classified as ‘enemy property’ under the law, thereby abolishing legal heir rights over it. According to the Enemy Property Act, 1968, such assets vest in the Custodian of Enemy Property of India (CEPI), which operates under the Union Home Ministry.

A Brief History Of Saif’s Inheritance And The Case:

Nawab Hamidullah Khan ruled Bhopal until the state acceded to the Union of India in 1949. Of his three children, all daughters, the eldest, Abida Sultan, migrated to Pakistan following her marriage. Under the current provisions of the law, properties left behind by such individuals are classified as "enemy properties", and this is why Khan’s properties have been termed as enemy properties.

However, in 1960, when the Nawab died, his second eldest daughter, Sajida Sultan, was recognised by the government as the sole successor to his private properties, the argument used by Khan’s counsel in the court and that is where the contention arises, as reported by PTI. Sajida Sultan was married to Iftikhar Ali Khan Pataudi. Their son, cricketer Mansoor Ali Khan 'Tiger' Pataudi, married Sharmila Tagore, and their son, Saif Ali Khan, inherits these properties.

In 2015, when CEPI classified the properties as ‘enemy property’. Sharmila Tagore Pataudi, Saif’s mother, approached the high court to challenge the order dated February 24, 2015.

In 2016, the government passed an ordinance clarifying that heirs would have no rights over enemy properties.

In Khan’s case, the Madhya Pradesh High Court, on December 13, 2024, directed the actor to approach CEPI within 30 days. However, it remains unclear whether the actor has taken any action. The affected properties include Flag Staff House, Noor-Us-Sabah Palace, Dar-Us-Salam, Bungalow of Habibi, and Ahmedabad Palace.

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What Is Enemy Property?

According to the Enemy Property Act of 1968, an ‘enemy property’ is defined as, "A property for the time being belonging to, or held or managed on behalf of, an enemy, an enemy subject, or an enemy firm".

Keyur D. Gandhi, Managing Partner, Gandhi Law Associates, explains, “The term ‘enemy property’ in India refers to assets owned by individuals considered enemies during conflicts, especially those who gained Pakistani or Chinese citizenship after the wars of 1962, 1965, and 1971. The Enemy Property Act of 1968, amended in 2017, governs the management and liquidation of these assets, enhancing the government’s authority over them”.

Tushar Kumar, Advocate, Supreme Court of India, says, “The settlement of enemy properties in India is governed by the Enemy Property Act, 1968, as amended in 2017, which vests such properties with the Custodian of Enemy Property for India (CEPI), functioning under the Ministry of Home Affairs”.

Who Is The Custodian Of Enemy Property?

The Ministry of Home Affairs defines, “The Custodian of Enemy Property for India is an Indian government department that is empowered to appropriate property in India owned by Pakistani nationals. After the Indo-Pakistani War of 1965, the Enemy Property Act was promulgated in 1968”.

How Many Enemy Properties Exist In India?

According to the Ministry of Home Affairs, there are currently 12,983 immovable properties classified as enemy properties in India. These belong to Pakistani nationals. The highest number of such properties are in Uttar Pradesh (5688), followed by West Bengal (4354), Delhi (633) and Tripura (500), with other states and union territories accounting for the remaining properties, shows the Ministry of Home Affairs data. 

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How Are Enemy Properties Disposed Of?

Under the Enemy Property Act, these properties are vested with CEPI, which oversees their management. This includes immovable assets and movable properties such as securities, money, or other assets.

A valuation committee, comprising government officials, assesses the value of the property and submits a report to the Custodian. Subsequently, a Disposal Committee, made up of senior government officials, advises the central government on whether to sell, use, or transfer the property.

Gandhi highlights, “After the 2017 amendment in the Enemy Property Act, legal heirs who are Indian citizens have no claims to enemy properties and are not entitled to compensation upon their disposal”.

Kumar adds, “The Custodian assumes complete authority over these assets, which are managed, leased, or auctioned under the statutory framework. The 2017 amendment categorically extinguishes any claims of ownership by legal heirs, including Indian citizens, thereby rendering the Custodian’s rights perpetual. High-profile cases, such as those involving Saif Ali Khan’s ancestral properties, fall squarely within the ambit of this legislation if classified as enemy property”.

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What Happens If The Property Is Vacant?

Gandhi says, “Enemy properties are sold through public auctions accessible to Indian citizens. Financing for purchases depends on individual financial institutions' policies and the clarity of the property title post-auction. Buyers should check with banks regarding loan availability”.

What Happens If The Property Is Occupied?

Kumar explains, “Occupants or legal heirs residing in enemy properties are obligated to vacate the premises, as these assets are deemed to be under the exclusive ownership and control of the Custodian”.

Enemy properties are sold through public auctions conducted on the Department of Investment and Public Asset Management (DIPAM) portal. Only Indian citizens and entities are eligible to participate in these auctions.

Notably, there is no compensation offered to legal heirs.

Kumar shares, “Under the amended provisions of the Enemy Property Act, no compensation or restitution is payable to the legal heirs or successors of enemy property owners. Once a property is vested in the Custodian, it becomes a state-owned asset, and all rights, title, and interest of the heirs are statutorily extinguished, regardless of their nationality or lineage”.

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Challenges In Buying Enemy Properties

However, buying these properties is not easy either, it involves lots of complexities. Kumar advises, “Prospective buyers often face challenges in securing financing, as the legal complexities and historical encumbrances associated with these properties render financial institutions circumspect. Purchasers are advised to conduct thorough due diligence to ascertain clear title and comply with the prescribed auction procedures to safeguard their acquisition”.

Legal heirs residing in enemy properties can continue to do so only until the property is officially recognised as ‘enemy property.’ Once declared, they lose all rights to it, including any compensation. The Custodian then disposes of the property through public auction or as otherwise recommended.

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