The Rehabilitation Department was established in 1947 at the time of partition of the country for re-settlement of the displaced persons who migrated from Pakistan. By the year 1961 almost entire work of re-settlement of displaced persons was completed and the Government of India transferred all rural residuary available lands and properties to the State Government through a Package Deal in 1961 on payment. Thereafter, remaining work as well as available lands and properties were also transferred by the Government of India to the State Government against payment through different Package Deals and Administrative & Financial Arrangements.
For the disposal of lands and properties received from the Government of India through Package Deal, State rules for its disposal were framed by the composite Punjab Government. The lands and properties received through Administrative & Financial Arrangements were being disposed off under the provisions of Displaced Persons (Compensation & Rehabilitation) Act, 1954