This particular law was designed to allow the easy confiscation of Palestinian property because the landowners were not allowed to return. It was unjust, no other word for it and it was legalized theft.
The problem with statements like this is that it neglects the context and consequences of the war (a war, btw, which Israel neither started nor wanted). It was not "legalized theft". To label it as "legalized theft" is to impart a sinister and malicious act to Israel on the results of war. A defensive war at that. To label it as "unjust" is to forget that the people excluded from return were those deemed to be hostile enemies to the State of Israel.
This particular law was originally designed to provide a Custodian for abandoned real, immovable property. It was a necessary step to create a lawful system to deal with abandoned property. The Custodian was granted broad powers to return land to its Arabs owners, or to retain it, or dispose of it. What else was to be done in the immediate aftermath of a war of destruction of the Jewish State? What other options would you suggest?
Yes, I know, I know. You believe that just two years after an attempted war of annihilation, in the midst of on-going and continued hostilities, that the hostile enemies of Israel should be granted the right to return. The UN believed it too. That is why 194 reads:
(The General Assembly) Resolves that the refugees wishing to return to their homes and live at peace with their neighbours should be permitted to do so at the earliest practicable date, and that compensation should be paid for the property of those choosing not to return and for loss of or damage to property which, under principles of international law or in equity, should be made good by the Governments or authorities responsible.
Here's the problem. There is still no peace. The conflict is still on-going. While it is a lovely idealistic notion to imagine that there should be no consequences to war and that war can be made just and that things can just go back to normal -- that is not the real world. Had a right of return been immediately implemented it would only have resulted in further physical conflict. Or the destruction of Israel. Or the decimation of the Arab Palestinians.
Again, I will state that Israel has shown remarkable restraint. Israel chose NOT to empty her territory of all Arabs as hostiles (in sharp contrast to not only the Arab Palestinians and Jordanians -- but the entire Arab ME).
The alternative is to give compensation to the refugees and their descendants -- ALL of them, including the nearly 1 million Jews who lost their property and businesses in ME countries despite the fact that they were not engaged in the hostilities and were citizens of those countries. Why does no one ever demand things be made right for them? THAT is unjust.