Ravenclaw door-knocker: “Where do vanished objects go?”

Prof McGonnagall : “Into non-being, which is to say, everything.”

Harry Potter and the Deathly Hallows, J.K. Rowling, 2007


Students of Indian history will be aware that one of the means which fuelled the rise of British paramountcy in India was the doctrine of lapse[1]. In terms of the doctrine, a princely State without a male heir (or competent heir) would be subsumed into the British Indian empire. The doctrine supplanted the long-established right of an Indian sovereign without an heir to choose a successor.

The principle of bona vacantia, escheat or lapse[2] works similarly: If an asset has no legal heir or claimants, then either the permanent ownership, or the temporary custodianship, of the asset is assumed by the State.

What can lead to an asset having no owner or being abandoned, or if the owner has passed away, with no legal heir or claimant?

As unlikely as it sounds, a possibility is that the individual forgot about the assets or it has been lost, or even mistakenly or wilfully abandoned. What is much more possible is that the individuals have passed on, and their legal heirs and successors are unaware about these assets and hence cannot make the claim. Hence such assets remain unclaimed over extended periods of time. Finally, the individual has passed on and did not have any legal heirs or successors.

What happens to such unclaimed assets? Do they vanish into non-being i.e. into everything? Do the rightful owners, heirs or claimants find or receive such assets eventually?

In this paper your columnist examines the Indian legal regime governing such unclaimed assets.

Indian Legal Position

The principle of bona vacantia or escheat or lapse was declared to be a part of the law in India by the Privy Council as early as in 1860[3]. The Privy Council also held that the general law having universal application is that “private ownership not existing, the State must be the owner as the ultimate Lord”.

Calcutta High Court separately observed (whilst noting the Privy Council judgment) as follows:

“Not that such a doctrine was unknown in India, for our ancient lawgiver Manu, for example, declared more than 2000 years ago thus in Manusawhita (Chapter DC, Verse 189):

Aharajyam Brahmanadravyam Rajna Nityamiti Sthiti, Itareshantu Varnanam Sarbabhave Harenripa.

This (verse), while negativing the king’s right to brahminical property even on failure of all heirs, affirmed the king’s title to all the properties belonging to persons of other classes dying leaving without any heir.”[4]

The principle thereafter finds a mention in the Indian Constitution. Article 296 specifies as follows:

  1. Property accruing by escheat or lapse or as bona vacantia.— 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 a State, vest in the Union or in that State.

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


In essence, Article 296 makes it clear that the principles applicable to bona vacantia, escheat or lapse, prior to commencement of the Constitution of India, would continue. It also draws on the English law principles on escheat that the Crown is regarded as “the Lord paramount of the whole soil of the country”[5] which succeeds to the asset in absence of any legal heir[6]. The article also follows the federalist approach in terms that assets situated in a State that would have accrued to the State, shall vest in the State, and in any other case, shall vest in the Union.

Several States have laws governing bona vacantia, escheat or lapse[7]. Such laws, by and large, specify the official or the authority which have general superintendence of escheat assets, the manner of inquiry, giving of notice, taking of possession, disposal of claims or challenges, etc. In general, the vesting of such assets in the State is of permanent nature.

The assets that vest in the Union, while not specified, can be taken to follow the legal position prior to the Constitution coming into force, and also in terms of matters legislated pursuant to Article 246 (and List 1 and List 3 of the Seventh Schedule) of the Constitution.

Escheat also finds mention in the personal laws governing succession. Section 29 of the Hindu Succession Act, 1956 states:

  1. Failure of heirs.— If an intestate has left no heir qualified to succeed to his or her property in accordance with the provisions of this Act, such property shall devolve on the Government; and the Government shall take the property subject to all the obligations and liabilities to which an heir would have been subject.

Similarly, in Section 34 of the Succession Act, 1925[8], it states:

  1. Where intestate has left no widow, and where he has left no kindred.— Where the intestate has left no widow, his property shall go to his lineal descendants or to those who are of kindred to him, not being lineal descendants, according to the rules hereinafter contained; and, if he has left none who are of kindred to him, it shall go to the Government.

Courts have noted that Section 29 comes into operation only on there being a failure of heirs. Section 29 shall not operate in favour of the State if there is any other heir of the intestate. Failure means a total absence of any heir to the person dying intestate[9].

It is posited that “Government” as referred to in the above two statutes, would follow the constitutional mandate, and that the unclaimed assets vest in one or more State Governments and in the Union Government in terms of the relevant State legislations and Union legislations[10].

It is important to note that if there are legal heirs or a will has been made, then the principles of bona vacantia, escheat and lapse and the statutory framework dealing with the same have no applicability.

Furthermore, there are safeguards and essential conditions which have been specified, including proving absence of heir and of giving public notice for claimants to step forward.

The Supreme Court has noted that when a question of escheat arises,

  1. 20. … the onus rests heavily on the person who asserts the absence of an heir qualified to succeed to the estate of the individual who has died intestate to establish the case. The law does not readily accept such a consequence.

*           *          *

  1. The principle that the law does not readily accept a claim to escheat and that the onus rests heavily on the person who asserts that an individual has died intestate, leaving no legal heir, qualified to succeed to the property, is founded on a sound rationale. … This principle is based on the norm that in a society governed by the rule of law, the court will not presume that private titles are overridden in favour of the State, in the absence of a clear case being made out on the basis of a governing statutory provision[11].

It has been again reiterated[12]:

  1. It is well settled that when a claim of escheat is put forward by the Government the onus lies heavily on the appellant to prove the absence of any heir of the respondent anywhere in the world. Normally, the court frowns on the estate being taken by escheat unless the essential conditions for escheat are fully and completely satisfied. Further, before the plea of escheat can be entertained, there must be a public notice given by the Government so that if there is any claimant anywhere in the country or for that matter in the world, he may come forward to contest the claim of the State.

It is noted that heirs or claimants can be anywhere in the world, and hence heirs or claimants need not be within the territorial jurisdiction of India or of the relevant State. This also would enhance the burden on the State to establish having met the essential conditions.

The Supreme Court, also building on the rule of law, noted that:

  1. 25. To allow administrative authorities of the State — including the Collector, as in the present case — to adjudicate upon matters of title involving civil disputes would be destructive of the rule of law. The Collector is an officer of the State. He can exercise only such powers as the law specifically confers upon him to enter upon private disputes.[13]

Hence, it would be necessary to ensure that the courts of competent jurisdiction make the necessary determination on whether or not the State has adequately established that principles of bona vacantia, escheat and lapse can be applied and has followed all essential conditions.

Properties and Assets

The kind of properties and assets within the sweep of the principle of bona vacantia, escheat and lapse are examined in this section.

“Property” is a term of the widest import, and subject to any limitation or qualification which the context might require, it signifies every possible interest which a person can acquire, hold and enjoy[14].

Accordingly, the principles of bona vacantia, escheat and lapse have been applied to a variety of properties and assets. These have included:

(i) the property of a dissolved corporation[15];

(ii) the property of a company struck off by the Registrar for non-filing of statutory returns[16];

(iii) if a dissolved corporation had a subsisting interest in the lease on the date of dissolution, then such interest[17];

(iv) tenancy interest, howsoever limited[18];

(v) debts, being a species of property[19]; and

(vi) shebait of mandir[20].

The principles of bona vacantia, escheat and lapse have also been, inter alia, applied to the financial assets[21] such as dividends on shares, matured deposits with companies (other than banks), matured debentures with companies, redemption amount of preference shares and credit balances in any bank account and deposits.


Points to Ponder

Given the federal approach to applying principles of bona vacantia, escheat and lapse envisaged in the Constitution, a variety of State legislations, case law which have developed, the overall approach of the polity as well as the institutional underpinning appear to be underdeveloped, inconsistent and requiring review.

Certain points to consider in respect of applying the principles of bona vacantia, escheat and lapse, are:

  • Property or assets do not appear to have a uniform definition across the State legislations.
    • A model legislation, with clear definitions, could be considered and which the States use to align their current laws and legislations.


  • Lack of recognition or clarity in the State legislations of the fact that certain types of properties or assets would accrue to the Union Government or as per legislations made by the Parliament.
    • The model legislation could also specify the federal approach expected in Article 296 in clear manner.
    • The Parliament can also enact a legislation that enunciates the approach for Union Government to implement Article 296.


  • Lack of public notice to claimants or heirs on a nationwide and worldwide basis (as laid down by the Supreme Court), and limiting notice obligation to the locality where the property is situate.[22]
    • Giving of global or national level notice is necessary to be consistent with the Supreme Court decisions, generally accepted legal practice and societal expectations, and in ensuring due opportunity to legal heirs or claimants to make due claims. This could be vide an internet site or portal that hosts the notices and details of unclaimed assets.


  • Lack of consistency across different types of assets in respect of whether the unclaimed asset passed into permanent ownership, or into temporary custodianship, of the Government (State or Union).
    • Temporary custodianship, which terminates on handover of the asset to rightful claimants appears to be a much fairer approach to specify. This should be the approach adopted by the Governments; to these ends, extended period of time for the custody, undertaking measures for reaching out to rightful claimants or heirs as well as strong diligence on the claims received prior to handover would be desired.
    • Perishable unclaimed assets, or when costs of custody can exceed the cost of assets, the assets could be sold or disposed of, and the proceeds held for the rightful claimants.
    • Passage into permanent State ownership should be avoided.
      1. Ultimately, the State has fiscal powers – to tax, to levy duty, to levy fees – that underpin the revenues and expenditures of the Government. Acquiring assets purely by chance, and primarily due to lack of knowledge of the rightful claimant or heirs about the assets is a practice that deserves deprecation and being discouraged.
      2. Separately, tracing the evolution of bona vacantia, escheat and lapse also led us to its origins in systems of monarchy or feudalism and assertion of sovereign’s paramountcy. In a modern democracy and republic, such a concept of accrual of unclaimed assets to the sovereign should not survive.
      3. The aim of the State should be to preserve and protect the unclaimed assets (or if perishable or costly to keep in custody, dispose of the same and hold the proceeds), and identify and hand over to rightful claimants. Currently, the approach at least as seen in the State legislations is far more adversarial and acquisitive.


  • Absence of independent institutional framework for dealing with unclaimed assets. The States largely depend on and require the Collectors or district administration to deal with unclaimed assets. These authorities may both lack the bandwidth and also the expertise in handling unclaimed assets, or applying the approach outlined above.
    • Creation of an independent institutional focus, geared towards objectives as outlined above – preserving and protecting the unclaimed assets, identifying and handing over to rightful claimants – and doing so in a citizen-centric, claimant-friendly, methodical manner, which inspires confidence of the citizenry that right will be done by them (as heirs and claimants or for their own heirs and claimants). Such an institution can also become the administrative machinery for the assets of a company dissolved under the Companies Act or other similar such incorporated bodies (absence of which machinery had been noted way back in 1959).[23]


  • Determination of bona vacantia, escheat and lapse by the authorities comprising the executive branch of the State.
    • In keeping with the Supreme Court decision[24], whilst the executive can conduct inquiries and initiate a claim of bona vacantia, escheat and lapse, the determination that indeed the claim is sustainable should be by a court of competent jurisdiction.


Even as the above propositions, and further propositions (dealing with treasure troves, lost and found objects, abandoned assets, conduct of public auctions or, giving of notices and so on) could be embedded into a model legislation, and movement towards ensuring that the assets are in the hands of the rightful heirs or claimants of a deceased. In a world where the degrees of separation keep reducing, being able to trace and locate the heirs and claimants can prove far easier.

Concluding Remarks

The key takeaways for the readers should be:

(i) For your own assets and properties, ensure your chosen heirs are fully aware and informed about the same, (and how to claim or obtain the same on demise or becoming incapacitated).

(ii) Make due nominations – especially for financial assets and employee benefits, and wherever else possible.

(iii) Make a will. The principles of bona vacantia, escheat and lapse and the laws outlined apply when a person dies intestate – without a will.


Pramod Rao, Group General Counsel at ICICI Bank. Views are personal. Assisted in certain research by Dikshi Arora.

[1] See HERE, also noted in Prayas Buildcon (P) Ltd. v. State of U.P., (2021) 144 ALR 496 : “We may recollect, having gone through history, that prior to 1857, several estates were taken over by British Company i.e. East India Company by way of annexation. Doctrine of lapse applied in Jhansi was another kind of above-mentioned two principles.

[2] Distinctions between bona vacantia” and “escheat” or “lapse” may be exceedingly fine. Bona vacantia means “ownerless goods” or “vacant goods” and can connote abandoned, lost, mislaid or forgotten property, whilst escheat is when no legal heir to a deceased’s property exists: both however result in permanent ownership or temporary custodianship of the Government, and hence are often used interchangeably. Cited from: <HERE >.

[3] Collector v. Cavary Vancata Narrainappah, (1859-61) 8 Moo IA 500 at pp. 525.

[4] Biswanath Khan v. Prafulla Kumar Khan, 1988 SCC OnLine Cal 48 : AIR 1988 Cal 275

The judgment goes on to hold: Hindu law was to be administered in the case of succession to properties of a Hindu dying intestate, it was to be so administered only when he had any heir to succeed thus providing occasion for private succession. But on a total failure of all private heirs, the properties and the succession thereto ceased to be governed by any personal law of succession and, therefore, a case of a Hindu, whether a Brahmin or a non-Brahmin, dying leaving no heirs, was not to be governed by the Sastric Hindu law as enunciated by Manu, but was to be governed by the general law of universal application and that general law was that “private ownership not existing, the State must be the owner as the ultimate Lord. This right to acquire by way of escheat or as bona vacantia is not a creature of any private law of succession but is an attribute of sovereignty. It is true that statutory provisions of private law of Succession e.g. S. 29, Hindu Succession Act, 1956, sometimes expressly recognised right of the State to acquire properties by escheat or as bona vacantia. But that right would have been very much there even without any such provisions”.

[5] Halsbury’s Laws of England, 4th edn., Vol. 17, para 1439, as cited in State of Rajasthan v. Lord Northbrook, 2019 SCC OnLine SC 1117: In view of difference of opinions and the distinguishing judgments (R. Banumathi, J. allowed the appeal and Indira Banerjee, J. dismissed the appeal), the matter is to be placed before the Chief Justice of India for referring the matter to the larger Bench.

[6] Prior to the Constitution coming into force, following statutes can be traced: Statutes 16 and 17 Victoria, c. 95, S. 27, an Act to provide for the Government of India asserted that “all real and personal estate within the said territories escheating or lapsing for want of an heir or successor, and all property within the said territories devolving, as bona vacantia for want of a rightful owner, shall (as part of the revenues of India) belong to the East India Company in trust for Her Majesty for the service of the Government of India”. Thereafter, S. 54 of the Government of India Act, 1858, the existing provision was continued in force and was construed as referring to the Secretary of State in Council in place of East India Company. Thereafter, S. 20(3)(iii) of the Government of India Act, 1915, provided that the revenues of India received for His Majesty would include, “all movable or immovable property in British India escheating or lapsing for want of an heir or successor, and all property in British India devolving as bona vacantia for want of a rightful owner”. Finally, S. 174 of the Government of India Act, 1935 contained a provision similar to the text of Art. 296.

[7] Examples of State legislation’s can be seen:

Andhra Pradesh:<HERE >

Rajasthan:<HERE >

Kerala: <HERE > ,

Telangana: <HERE>,

Orissa: <HERE >,

West Bengal: <HERE >

In some States, the Land Revenue Code may contain the provisions on bona vacantia, escheat and lapse.

[8] This part of the Act does not apply to Parsi intestates; for Parsi intestates, see S. 56 of the Succession Act, 1925. Muslim personal law embeds the principle of escheat: the State is regarded as the ultimate heir of every deceased Muslim without any heir, see also: <HERE >. Such escheated land is also called nazul land: “Land or buildings in or near towns or villages, which have escheated to the Government; property escheated or lapsed to the State: commonly applied to any land or house property belonging to Government either as an escheat or as having belonged to a former Government.” (Narain Prasad Aggarwal v. State of M.P., (2007) 11 SCC 736.  It is such land which is owned and vested in the State on account of its capacity of sovereign, and application of right of bona vacantia, which is covered by the term “nazul”, as the term is known for the last more than one and half century. The nazul properties form the assets owned by the State in trust for the people in general who are entitled for its use in the most fair and beneficial manner for their benefit. See also: Prayas Buildcon (P) Ltd. v. State of U.P., (2021) 144 ALR 496 : “In Uttar Pradesh, management of ‘nazul properties’, in absence of statutory provisions, is governed by various administrative orders compiled in a manual called ‘nazul manual’. The Government has made provisions of management of ‘nazul’ through its own authorities, namely, District Magistrate or Commissioner, or, in some cases, through local bodies. In relation to nazul properties situated in Lucknow, the role of Lucknow Development Authority, Lucknow (LDA) is only to the extent of management and preservation thereof. LDA is not the owner of the nazul land/property, which vests only in the State Government. Governments have given nazul properties on lease to private persons/entities under the Government Grants Act, 1895.”

[9] State of Punjab v. Balwant Singh, 1992 Supp (3) SCC 108 : AIR 1991 SC 2301 : (1991) 1 SCR 458.

[10] That it can only be the State Government or the Union Government, and not a local authority or municipal authority can be noted from the text of Art. 296 and the decision in Ram Prasad v. Gram Panchayat, 1956 SCC OnLine Raj 106 : AIR 1957 Raj 43.

[11] Kutchi Lal Rameshwar Ashram Trust v. Collector, (2017) 16 SCC 418, 429, 430  and 432.

[12] State of Bihar v. Radha Krishna Singh, (1983) 3 SCC 118, 216.

[13]  Kutchi Lal Rameshwar Ashram Trust v. Collector, (2017) 16 SCC 418, 432.

[14] J.K. Trust v. CIT, AIR 1957 SC 846.

[15] Peirce Leslie and Co. Ltd. v. Violet Ouchferlong Wapshare, AIR 1969 SC 843 : (1969) 39 Comp Cas 808 : 1969 3 SCR 203. However, this seems to lack statutory provisions in support. See S. 352 of the Companies Act, 2013 (in pari materia to S. 555 of the Companies Act, 1956 or section 244B of the Companies Act, 1913) which deal with distribution of money to creditors or contributors and in specifying that the rightful claimant can receive back moneys after due process being followed (without the elapse of time having any adverse implication and hence an example of temporary custodianship by the Government); Noting this, Calcutta High Court observed in Rai Saheb U.N. Mandal’s Estate Ltd., In re, 1958 SCC OnLine Cal 137 : AIR 1959 Cal 493 : (1960) 30 Comp Cas 172 Cal : (1958-59) 63 CWN 889:  “If, therefore, without the express statutory provisions of Ss. 354 and 355 of the English Companies Act, 1948, the doctrine of bona vacantia applied in England, it would be all the more so herein India because of Art. 296 of the Constitution of India, which uses the words any property in the territory of India which if this Constitution had not come into force would have accrued to His Majesty. Now if this property of a dissolved company could accrue formerly to the Crown in India then as bona vacantia it now belongs to and vests in the Union of India under Article 296 of the present Constitution. Normally a defunct company would hardly have any assets or property, but there may in few cases be some, however negligible. I asked Mr Basu, who was the counsel appearing for the Registrar of Joint Stock Companies to find out whether on the point the office of the Registrar, had already any procedure, and I was told that there was none. Parliamentary legislation appears to be necessary to evolve an administrative machinery for the protection and disposal of the assets of a company, dissolved under S. 560 of the Companies Act, 1956. For unclaimed dividends and undistributed assets of companies in liquidation there is provision for their going to the public account of India in the Reserve Bank under S. 555 of the Companies Act. But there appears no comparable provision for assets of dissolved Companies under S. 560 of the Act.

[16] TEE-EM (P) Ltd. v. Tata Consultancy Services Ltd (though the company was finally restored on the register after due application to the court and its orders in such behalf.

[17] Narendra Bahadur Tandon v. Shankar Lal, (1980) 2 SCC 253.

[18] Biswanath Khan v. Prafulla Kumar Khan, 1988 SCC OnLine Cal 48 : AIR 1988 Cal 275.

[19]  Arvind Mills Ltd. v. State of Gujarat, 1965 SCC OnLine Guj 225, with also a finding that when the debtor is a resident of a State, the situs of the debt would also be within the State and if the debt becomes bona vacantia, it would vest in the State under Art. 296.

[20] From Tagore Law Lectures (1936) published in “Hindu Law of Religious and Charitable Trust”, Justice B.K. Mukherjee (former Chief Justice): “As there is always an ultimate reversion to the founder or his heirs, in case the line of shebaits is extinct, strictly speaking no question of escheat arises so far as the devolution of shebaitship is concerned. But cases may be imagined where the founder also has left no heirs, and in such cases the founder’s properties may escheat to the State together with the endowed property. In circumstances like these, the rights of the State would possibly be the same as those of the founder himself, and it would be for it to himself, and it would be for it to appoint a shebait for the debutter property. It cannot be said that the State receiving a dedicated property but escheat can put an end to the trust and treat it as secular property”, cited in Rambir Das v. Kalyan Das, (1997) 4 SCC 102.

[21] Your columnist will endeavour to examine the treatment of financial assets in a separate paper.

[22] Even if such notice is by “an announcement of the declaration to be made by beat of drum in the village in which the property is situated or lies”, (extract from S. 12 of Telangana Escheats and Bona Vacantia Act, 1974, accessible Here, while creates a vivid imagery and throwback to the days of the announcements made in the days of rajas and nawabs, it does not satisfy the Supreme Court dictum.

[23] Rai Saheb U.N. Mandal’s Estate Ltd., In re, 1958 SCC OnLine Cal 137 : (1960) 30 Comp Cas 172 Cal: AIR 1959 Cal 493 : (1958-59) 63 CWN 889, also see footnote 14 above.

[24]  Kutchi Lal Rameshwar Ashram Trust v. Collector, (2017) 16 SCC 418.

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