The Constitution of India
Article 294
Succession to property, assets, rights, liabilities and obligations in certain cases
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.
Why this exists
Before 1950, India was governed under British sovereignty, and legally, government property and contracts were held 'for' or 'in the name of' the King (His Majesty). When India became a sovereign republic under the new Constitution, a legal mechanism was needed to transfer all this property, along with contractual rights and debts, to the new Union and State Governments without any legal gap or dispute. Article 294 provided that automatic, seamless succession. The proviso about Pakistan and the divided Bengal/Punjab provinces was necessary because Partition in 1947 had already required splitting assets and liabilities between India and Pakistan, and between the newly created halves of Bengal and Punjab — so this Article had to respect those prior adjustments rather than override them.
How courts read it
Courts have generally treated Article 294 as a straightforward succession clause confirming continuity of governmental property and obligations, rather than creating new rights for private parties. Judgments such as those dealing with pre-Constitution government contracts have clarified that this Article ensures the Union or State Government simply steps into the shoes of the former Crown government for purposes of ownership and liability, but does not by itself expand or alter the terms of any existing contract or obligation.
Common misconceptions
- Myth: Article 294 created brand-new government property or wiped out old debts.
Fact: It didn't create anything new or cancel anything; it simply transferred existing property and existing obligations from the British Crown's government to the new Indian Union and State Governments. - Myth: This Article decided how India and Pakistan divided assets after Partition.
Fact: That division had already happened through separate agreements before the Constitution began; Article 294 only says its transfers are subject to those earlier or ongoing adjustments, it doesn't itself perform that division.