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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6412 OF 2002
P.K. Mohan Ram ......Appellant
Versus
B.N. Ananthachary and others ......Respondents
JUDGMENT
G.S. Singhvi, J.
1. This is an appeal for setting aside judgment dated 27.2.2001 passed by
the learned Single Judge of Madras High Court in Second Appeal No.
1090/1983 and Civil Miscellaneous Petition No.8137/1983 whereby he
reversed the judgments and decrees of the trial Court and the lower appellate
Court and dismissed the suit filed by the appellant for partition of his 1/17th
share in the suit property.
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2. Shri K. Perumal Iyer, who owned the suit property, executed
Settlement Deed dated 27.3.1969 in favour of the appellant, respondent
Nos.1 and 2 and 13 others and declared that from the date of execution he
and the beneficiaries shall enjoy the land and house etc. without creating any
encumbrance or making any alienation whatsoever. He further declared that
during his life, he will collect the rental income from the land and house and
after paying the municipal taxes, remaining income would be spent by him
according to his choice; that after his death, the property shall be sold at the
prevailing market price by all 16 beneficiaries and out of the sale proceeds, a
religious trust should be created by paying Rs.4,000/- to Devasthanam of Sri
Prasanna Venkatesa Perumal in the office of the Saurashtra Sabha at
Madurai for the purpose of taking out annual procession of Perumal in the
sacred streets on Amavasai day in the month of Margazhi; that the honors of
the temple should be bestowed upon beneficiary Nos.1 and 2 and, after
them, upon their heirs; that from the sale proceeds, the beneficiaries shall
purchase an immoveable property of Rs.4,000/- in the name of Balu G.
Perumal Iyer Feeding Charities and all 16 trustees shall provide for feeding
of his relatives on the day of the procession of the deity (Perumal) and that if
there is delay in purchasing the immovable property, the beneficiaries shall
be free to advance the money on interest for the purpose of generating
income which could be used for feeding; that his last rites shall be performed
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by beneficiary Nos.1 and 2 and all 16 persons shall together spend Rs.2000/-
from their personal funds for that purpose. The settlor also indicated that he
had mortgaged the land and house to Ramaseshan and Co. vide Mortgage
Deed dated 24.3.1969 for a sum of Rs.1500/- which shall be redeemed by
him and in the event of death before redemption, all 16 beneficiaries shall
discharge the debt. The settlor further ordained that after deducting
Rs.8,000/- from the sale price, the balance amount should be divided into 17
shares of which beneficiary Nos.1 and 2 shall take three shares and
beneficiary Nos.3 to 16 shall take one share each. If any one of 16
beneficiaries was to die before sale of the property, the remaining persons
were to get absolute right to sell the property. The settlor finally recorded
that he shall have no right whatsoever to cancel the `Settlement Deed' for
any reason whatsoever or alter the terms thereof.
3. Shri K. Perumal Iyer died on 4.12.1972. After his death, the appellant
filed a suit (O.S. No.626/1972) for appointment of receiver to carry out the
directions mentioned in the `Settlement Deed'. The trial Court decreed the
suit, but on appeal, the High Court reversed the decree of the trial Court and
dismissed the suit with an observation that the same shall not operate as res
judicata against the fresh suit which may be filed by the plaintiff (appellant
herein). After disposal of the appeal, the appellant filed O.S. No.858 of
4
1979 for partition of his 1/17th share in the suit property and for grant of a
declaration that in view of the negative covenant contained in the
`Settlement Deed', the settlor had no right to execute Revocation Deed dated
27.2.1970 or Will dated 30.7.1972. In the written statement filed by
defendant Nos.1 and 2 (respondent Nos.1 and 2 herein), it was claimed that
the appellant and his brothers and sisters obtained the `Settlement Deed' by
playing fraud and on discovery thereof, Shri K. Perumal Iyer executed
`Revocation Deed' and then executed the `Will' whereby he bequeathed the
property in their favour. They also pleaded that the suit filed by the plaintiff
(appellant herein) is barred by Order II Rule 2 of the Code of Civil
Procedure (CPC) because the earlier suit filed by him for appointment of
receiver for carrying out the directions contained in the `Settlement Deed'
was dismissed by the High Court in A.S. No. 374/1974.
4. On the pleadings of the parties, the trial Court framed as many as 12
issues including the following:
1. Whether the will in favour of defendants 1 and 2 is valid
and binding?
2. Whether the document dated 27.3.1969 is not a
settlement?
3. Whether the cancellation deed dated 27.2.1970 is true
and valid?
4. Whether the suit is barred by res judicata?
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5. Whether the suit is barred under Order II Rule 2 of
C.P.C.?
6. Whether the settlement deed was brought into existence
due to fraud and misrepresentation?
5. After considering the pleadings and evidence of the parties and
hearing their advocates, the trial Court vide its judgment dated 24.4.1982
held that document marked Ex.A-2 was `Settlement Deed' and not `Will'
and that the same was not executed as a result of fraud or misrepresentation
and that the settlor did not have the right to execute `Revocation Deed'
Ex.B-2 and `Will' Ex.B-3. The trial Court further held that the second suit
filed by the plaintiff is not barred by res judicata or Order II Rule 2 CPC. In
the end, the trial Court declared that the plaintiff is entitled to partition of the
suit property and accordingly passed a preliminary decree in his favour.
6. Respondent Nos.1 and 2 challenged the judgment and decree of the
trial Court in Appeal Suit No.102/1982, which was dismissed by the lower
appellate Court vide judgment and decree dated 10.3.1983. However, the
second appeal preferred by them was allowed by the learned Single Judge,
who held that even though Ex.A-2 was titled and described as `Settlement
Deed', in reality it was a `Will' executed by late Shri K. Perumal Iyer. The
learned Single Judge further held that the appellant herein has no right in the
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suit property because the settlor had bequeathed the same in favour of
respondent Nos.1 and 2 herein.
7. Shri R. Sundaravaradhan, learned senior counsel appearing for the
appellant submitted that the impugned judgment is liable to be set aside
because the learned Single Judge misinterpreted Ex.A-2 and held it to be a
`Will' ignoring the specific stipulation contained therein that it was a
`Settlement Deed'. Learned senior counsel referred to Section 19 of the
Transfer of Property Act and argued that the transfer of the property rights in
praesenti coupled with an unequivocal inhibition against
cancellation/amendment thereof clearly shows that Exhibit A-2 was a
`Settlement Deed' and not a `Will'. In support of his arguments, Shri
Sundaravaradhan relied upon the judgments of this Court in Rajes Kanta
Roy v. Santi Debi 1957 SCR 77, A. Sreenivasa Pai and another v.
Saraswathi Ammal alias G. Kamala Bai (1985) 4 SCC 85 and Namburi
Basava Subrahmanyam v. Alapati Hymavathi and others (1996) 9 SCC
388 and of Madras High Court in Gangaraju v. Pendyala Somanna AIR
1927 Madras 197, Venkatasubramaniya Iyer v. Srinivasa Iyer AIR 1929
Madras 670.
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8. Shri M.S. Ganesh, learned senior counsel appearing for the
respondents supported the impugned judgment and argued that the learned
Single Judge rightly treated Ex.A-2 as a `Will' because the settlor did not
create any right in praesenti in favour of the appellant and the prohibition
contained therein against cancellation/modification of `Settlement Deed'
was not inconsequential. Shri Ganesh emphasized that the rights created in
favour of the beneficiaries were contingent and were to become operative
after the death of the settlor and, as such, the learned Single Judge rightly
treated Ext. A-2 to be a Will. Learned senior counsel placed reliance on the
judgment in Vynior's case, Trin. 7 Jac. 1 Rot. 2629 (printed in the English
Reports, Volume LXXVII, King's Bench Division VI), as also the
judgments of Calcutta and Madras High Courts in Sagar Chandra Mandal
v. Digamber Mandal and others (1909) 9 CLJ 644, Ramaswami Naidu
and another v. Gopalakrishna Naidu and others AIR 1978 Madras 54,
Ponnuchami Servai v. Balasubramanian and others AIR 1982 Madras
281 and Poongavanam v. Perumal Pillai and another (1997) 1 MLJ 169
and argued that interpretation placed by the learned Single Judge on Ex.A-2
is in consonance with the law laid down by this Court and different High
Courts. Shri Ganesh also referred to the judgment of this Court in Rajes
Kanta Roy v. Santi Debi (supra) and submitted that the contingent right, if
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any, created in favour of the plaintiff-appellant could not be made basis for
treating Ex.A-2 as `Settlement Deed'.
9. For deciding the question raised in this appeal, it will be useful to
notice the contents of Ex.A-2. The English translation of the document
produced by Shri M.S. Ganesh, learned senior counsel for the respondents,
which was accepted by learned senior counsel appearing for the appellant as
correct, reads thus:
"Document No.753/1969
Settlement Deed of land and house property of the value
of Rs.20,000/-
xxxxxxxxxxxxxxxx
The settlement deed executed by me in respect of the land and
house etc. in favour of these 16 persons is as follows: I did not
beget any male or female issue. My wife Ponnammal died
about 3 years ago. In accordance with the terms of the partition
deed dated 29.1.1937, bearing Ramanthapuram R.O.1 162.43 to
48. 701/1937 between my brothers Balu K. Ramaswamy Iyer
and Balu K. Nannaiyer and me, I got as my share the
undermentioned land and house etc. valued at Rs.20,000/-.
Since then I have been in uninterrupted possession and
enjoyment of the same on payment of municipal taxes and so
on. You 16 persons being my relatives and considering your
welfare and mine and out of my love and affection for you, I
settle this property on you 16 persons by executing this
settlement deed. From this day onwards I and you shall enjoy
the under mentioned land and house etc. without creating any
encumbrance or making any alienation whatsoever. During my
lifetime I shall collect the rental income from the under
mentioned land and house etc. and after paying the municipal
taxes, with the remaining income I shall spend my life as I wish
till the end of my days. After my death, you 16 persons shall
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become eligible and have absolute right to sell the under
mentioned land and house at the prevalent market price. Out of
the sale proceeds thus received, you should create a religious
trust by paying Rs.4,000/- to the Devasthanam of Sri Prasanna
Venkatesa Perumal in the office of the Saurashtra Sabha at
Madurai for the purpose of taking out annual procession of
Perumal in the sacred streets on Amavasai day in the month of
Margazhi. The honors at the temple should be bestowed upon
persons 1 and 2 among you and after them upon their heirs.
Further, from the sale proceeds, you should purchase an
immoveable property for Rs.4,000/- in the name of Balu G.
Perumal Iyer Feeding Charities and you 16 persons as trustees
should provide for feeding of my relations on the day of the
procession of the deity (Perumal). Should there be any delay in
purchasing the immovable property, you 16 persons would be
fully entitled to advance money on interest or by mortgage to
generate income for the feeding. Upon my death, whoever
among 1 and 2 of you is present shall perform my last rites and
all you 16 persons shall together spend upto Rs.2,000/-from
your personal funds for that purpose. During my life time, I
myself shall redeem the mortgage of the undermentioned land
and house which I had mortgaged to Rameseshan & Co. of
Madurai by a mortgage deed dated 24.3.1969 for a sum of
Rs.1500/-. In the event I die before redeeming the mortgage,
you 16 persons shall discharge that debt. As mentioned above,
after deducting Rs.8,000/- from the sale price, the balance
amount should be divided into seventeen shares. 1 and 2
among you shall take three shares, 3 to 16 among you shall take
one share each. 1 and 2 among you shall divide the three shares
equally between you. If anyone of you 16 persons dies before
the sale of the property, the remaining persons excluding the
deceased shall have the absolute right to sell the property. I
shall have no right whatever to cancel this settlement deed for
any reason whatsoever or to alter these terms. I execute this
settlement deed of my own free will."
(emphasis supplied)
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10. Sections 19 and 21 of the Transfer of Property Act, 1882 (for short,
`the 1882 Act') which elucidate the expressions "vested interest" and
"contingent interest" in the context of transfer of property read as under:
"19. Vested interest.- Where, on a transfer of property, an
interest therein is created in favour of a person without
specifying the time when it is to take effect, or in terms
specifying that it is to take effect forthwith or on the happening
of an event which must happen, such interest is vested, unless a
contrary intention appears from the terms of the transfer.
A vested interest is not defeated by the death of the
transferee before he obtains possession.
Explanation.- An intention that an interest shall not be vested is
not to be inferred merely from a provision whereby the
enjoyment thereof is postponed, or whereby a prior interest in
the same property is given or reserved to some other person, or
whereby income arising from the property is directed to be
accumulated until the time of enjoyment arrives, or from a
provision that if a particular event shall happen the interest shall
pass to another person.
21. Contingent interest. - Where, on a transfer of property, an
interest therein is created in favour of a person to take effect
only on the happening of a specified uncertain event, or if a
specified uncertain even shall not happen, such person thereby
acquires a contingent interest in the property. Such interest
becomes a vested interest, in the former case, on the happening
of the event, in the latter, when the happening of the event
becomes impossible.
Exception. - Where, under a transfer of property, a person
becomes entitled to an interest therein upon attaining a
particular age, and the transferor also gives to him absolutely
the income to arise from such interest before he reaches that
age, or directs the income or so much thereof as may be
necessary to be applied for his benefit, such interest is not
contingent."
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A reading of the plain language of the above reproduced sections makes it
clear that an interest can be said to be a vested interest where there is
immediate right of present enjoyment or a present right for future
enjoyment. An interest can be said to be contingent if the right of enjoyment
is made dependent upon some event which may or may not happen. On the
happening of the event, a contingent interest becomes a vested interest.
11. In Rajes Kanta Roy v. Santi Debi (supra), this Court considered the
distinction between `vested interest' and `contingent interest' in the
backdrop of dispute between the widow and two sons of Ramani Kanta Roy,
who possessed considerable properties. Two suits filed by the parties in
relation to the suit property ended in compromise decrees. On account of
the alleged violation of compromise decree, Santi Debi filed an application
for execution and prayed for issue of a direction for release of the arrears of
her monthly allowances. She also prayed for attachment and sale of the
immovable properties. Appellant, Rajes Kanta Roy filed objections under
Section 47 of the Code of Civil Procedure. The same were rejected by the
Subordinate Judge. Appeal filed by him was dismissed by the Calcutta High
Court. One of the questions considered by this Court was whether the
interest created by the deed executed by Ramani Kanta Roy was a vested or
12
contingent interest. The Court referred to Sections 19 and 21 of the Transfer
of Property Act and Sections 119 and 120 of the Indian Succession Act,
Williams on Executors and Administrators (13th Edition) Vol.2, p.658,
Jarman on Wills (8th Edition) Vol.II, p.1390 and p.1373 and observed:
"Apart from any seemingly technical rules which may be
gathered from English decisions and text-books on this subject,
there can be no doubt that the question is really one of
intention to be gathered from a comprehensive view of all the
terms of a document. Learned Solicitor-General frankly
admitted this, and also that a court has to approach the task of
construction in such cases with a bias in favour of a vested
interest unless the intention to the contrary is definite and clear.
It is, therefore, necessary to consider the entire scheme of the
deed of trust in the present case, having regard to the terms
therein, and to gather the intention therefrom."
The Court then referred to different portions of the deed executed by
Ramanai Kanta Roy and observed:
"Now, there can be no doubt about the rule that where the
enjoyment of the property is postponed but the present income
thereof is to be applied for the benefit of the donee the gift is
vested and not contingent. (See Explanation to s.19 of the
Transfer of Property Act, Explanation to s.119 of the Indian
Succession Act. See also Williams on Executors and
th
Administrators, 13 Ed., Vol.2, p.663, para.1010, and Jarman
on Wills, 8th Ed., Vol.II, p.1397). This rule operates normally
where the entire income is applied for the benefit of the donee.
The distinguishing feature in this case is that it is not the entire
income that is available to the donee for their actual use but
only a portion thereof. But it is to be observed that according to
the scheme of the trust deed, the reason for limiting the
enjoyment of the income to a specified sum thereof, is
obviously in order to facilitate and bring about the discharge of
the debts. As already explained the underlying scheme of the
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trust deed is that the enjoyment is to be restricted until the debts
are discharged. Whatever may be said of such a provision
where a donee is not himself a person who is under any legal
obligation aliunde to discharge such debts, the position in this
case is different. The two sons are themselves persons who, if
the settlor died intestate, would be under an obligation to
discharge his debts out of the properties which devolve upon
them. It is only the surplus which would be legally available
for division between them. In such a case, the balance of the
income which is meant to be applied for the discharge of the
debts is also an application of the income for the benefit of the
donees. It follows that the entire income is to be applied for the
benefit of the donee and only the surplus, if any is available to
the donees. Hence the provision in the trust deed that lots I to
IV are to devolve on Rajes and lot V on Ramendra and that the
surplus income of each of these lots after the discharge of the
debts is also to devolve in the same way, clearly operates as
nothing more than the present allotment of these properties
themselves to the donees subject to the discharge of debts
notionally in the same proportion. Thus, taking the substance
of the entire scheme of this division between the two sons the
position that emerges is as follows. (1) Specified lots are ear-
marked for each of the two sons. (2) The present income out of
those lots is to be applied for the discharge of the debts after
payment of specified sums therefrom by way of monthly
payments to the two sons and presumably such application is to
be notionally pro rata. (3) Any surpluses which remain from
out of the income of each of the lots are to go to the very person
to whom the corpus of the lot itself is to belong on the
termination of the trust. (4) In the event of any of the two sons
dying before the termination of the trust, his interest in the
monthly payments out of the income is to devolve on his heirs.
These arrangements taken together clearly indicate that what is
postponed is not the very vesting of the property in the lots
themselves but that the enjoyment of the income thereof is
burdened with certain monthly payments and with the
obligation to discharge debts therefrom notionally pro rata, all
of which taken together constitute application of the income for
his benefit.
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It may be noticed at this stage that one of the features of a
contingent interest is that if a person dies before the
contingency disappears and before the vesting occurs, the heirs
of such a person do not get the benefit of the gift. But the trust
deed in question specifically provides in the case of Rajes -
with whose interest alone we are concerned - that even in the
event of his death it is his heirs (then surviving) that would take
the interest. It has been urged that the provision in cl.12(a) in
favour of the heirs then surviving is in the nature of a direct gift
in favour of the heir or heirs who may be alive at the date when
the contingency disappears. But even so, this would make no
practical difference. It is to be remembered that in this case the
parties belong to the Dayabhaga school of Hindu Law - and
this is admitted before us. It is also to be remembered that up to
the third degree in the male line the principle of representation
under the Hindu Law operates. The net result of the provision,
therefore, is that whenever the alleged contingency of discharge
of debts may disappear the person on whom the interest would
devolve would, in the normal course, be the very heir (the lineal
descendant then surviving or the widow) of Rajes. The actual
devolution of the interest, therefore, would not be affected by
the alleged contingency. That being so, it is more reasonable to
hold that the interest of Rajes under the deed is vested and not
contingent.
This view is confirmed by the fact that under the
compromise decree which is now sought to be executed, both
the judgment-debtors, Rajes and Ramendra, created a charge
for the monthly payment to Santi Devi and agreed to such
charge being presently executable. This shows clearly that they
themselves understood the interest available to them under the
trust as a vested interest."
(emphasis supplied)
12. In Usha Subbarao v. B.N. Vishveswaraiah (1996) 5 SCC 201, a
two-Judge Bench was called upon to consider whether the appellant is
entitled to share of her husband in the properties left by her father-in-law,
15
Dr. N.S. Nanjundiah on the basis of a Will executed by him. The appellant
pleaded that the respective shares of the sons of the testator including her
husband vested in them as per the Will and after the death of her husband,
she is entitled to the share of her husband. The trial Court held that the
succession opened on the death of the testator by virtue of which all his sons
became entitled to equal shares in the properties and the recital in the Will
that the partition should take place amongst the surviving children after the
death of Smt.Nadiga Nanjamma is really intended to refer to the children
surviving the testator. This view of the trial Court was reversed by the High
Court and the suit was dismissed. This Court referred to Sections 19 and 21
of the 1882 Act, Sections 119 and 120 of the Indian Succession Act and
reiterated one of the propositions laid down in Rajes Kanta Roy v. Santi
Devi (supra) by making the following observations:
"Although the question whether the interest created is a vested
or a contingent interest is dependent upon the intention to be
gathered from a comprehensive view of all the terms of the
document creating the interest, the court while construing the
document has to approach the task of construction in such cases
with a bias in favour of vested interest unless the intention to
the contrary is definite and clear."
The ratio of the above noted two judgments was followed in another two-
Judge Bench in Kokilambal v. N. Raman (2005) 11 SCC 234.
16
13. Having noticed the distinction between vested interest and contingent
interest, we shall now consider whether Ex.A-2 was a Settlement Deed or a
Will. Although, no strait-jacket formula has been evolved for construction
of such instruments, the consistent view of this Court and various High
Courts is that while interpreting an instrument to find out whether it is of a
testamentary character, which will take effect after the life time of the
executant or it is an instrument creating a vested interest in praesenti in
favour of a person, the Court has to very carefully examine the document as
a whole, look into the substance thereof, the treatment of the subject by the
settlor/executant, the intention appearing both by the expressed language
employed in the instrument and by necessary implication and the
prohibition, if any, contained against revocation thereof. It has also been
held that form or nomenclature of the instrument is not conclusive and the
Court is required to look into the substance thereof.
14. Before proceeding further, we may notice the judgments on which
reliance was placed by learned counsel for the parties. In Gangaraju v.
Pendyala Somanna (supra), the learned Single Judge was called upon to
construe deed dated 27.2.1917 executed by one Kristnamma. The learned
Single Judge referred to the contents of the document and observed:
17
"The document on the face of it is of a non-testamentary
character. It was so stamped and so registered. It is called a
dakal dastaveju, which means a conveyance or settlement deed.
It is true that a document which is not a Will in form, may yet
be a Will in substance and effect; but as was held in Mahadeva
Iyer v. Sankarasubramania Iyer (1), if an instrument is a deed in
form, in order to hold that it is testamentary or in the nature of a
Will, there must be something very special in the case; and
unless there are circumstances which compel the Court to treat
an instrument in the form of a deed as a Will, the Court will not
do so. The leading argument of the appellant is that the
document created no estate in praesenti. A more literal
translation of the fourth sentence in para 2 of the document is:
Therefore, on account of my affection for you, I have
arranged that after my death the property shall belong to
you.
It is certainly very difficult to derive from these words any
immediate interest crated in favour of the plaintiff. But the line
between a Will and a conveyance reserving a life estate is a fine
one, and it would be hard to define in some cases where the
document has been held to be non-testamentary, wherein the
personal interest which was transferred consists. A more easily
applied test is that of revocability. There is nothing in the suit
document to show that Kristnamma reserved the right to revoke
it. On the contrary there is an undertaking not to alienate any
part of the property during his lifetime. I consider that this is
equivalent to a promise not to revoke the instrument, because if
the executant intended to reserve that right he could not
consistently have parted with the right to alienate. The same
intention to give finality to the deposition is suggested by Ex.3,
which is a conveyance of a portion of the property executed
jointly by Kristnamma and the plaintiff. The fact that the
plaintiff was required to join is significant, and in the schedule
the property is described as that which was conveyed by
Kristnamma to him. This document seems also to lend some
colour to the view that an immediate conveyance of interest
was intended in Ex.F. I think that Kristnamma had the
intention not to revoke the conveyance and this has always been
regarded as one of the most important tests."
(emphasis supplied)
18
15. In Venkatasubramaniya Iyer v. Srinivasa Iyer (supra), the question
considered was whether the document marked Exhibit - C is a Settlement or
a Will. The learned Single Judge answered the question in the following
words:
"....A question of that kind is one that has to be decided
primarily on the terms of the document itself. It was executed
by a widow, the mother of the plaintiff, and is styled a
settlement in favour of the plaintiff. It recites certain family
arrangements by which certain moveables are divided between
the widow and the plaintiff, and the widow retains certain
immovable property for herself. It deals with property to an
extent of over three velis left to her by her husband under his
will absolutely and recites that, in respect of that on account of
the request made to her by her son for the benefit of his minor
son, the present defendant and out of favour to himself and in
consideration of the arrangement that he would not during her
lifetime encumber or alienate the rights that would come to him
in the property after her death, she on her side undertakes to
meet all her own expenses till her death out of the income and
not to alienate the property. Thus the document prohibits both
parties from alienating the rights retained or given thereby. It
directs that after the widow's death, the plaintiff and his heirs
shall enjoy the property with all absolute rights. It further
provides that if the widow fails to pay the kist on the property,
the plaintiff shall pay and may recover from her out of her
income, and that the pattah for the property shall be transferred
to the plaintiff. The document is styled a settlement and
registered.
It is contended by the appellant that the document is a will since
the only operative portion of it is that which bequeaths the
property to the plaintiff and his heirs after the death of the
widow. Both the lower Courts have rejected this contention and
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held the document to be a settlement. I think it is clear from the
tenor of the document that it is not a will. It mentions
considerable property which is not disposed of by it at all. It
does more than bequeath property to the plaintiff after the
widow's death. He obtains by it certain rights in presenti, for
example, the right as covenanted with him that the widow will
not alienate the property during her lifetime. He himself is
given the right to recover the unpaid kists from her income and
to have the pattah transferred to his name. There is no language
indicating that the widow was retaining with her any power to
revoke the document, while the surrender of her right to
alienate during her lifetime indicates that she did not reserve
any power to revoke. These points combined with the facts that
the parties intended the document to be a settlement and styled
it as such and that it was handed over to the plaintiff and not
retained with the widow are sufficient to indicate that the
widow was merely retaining a life-interest in the property and
was transferring to the plaintiff the vested remainder. It is not of
much help to refer to reported rulings in a case of this kind
when the decision has to be based on the wording of a
particular document, but documents of very similar wordings
were held to be settlements and not wills in Rajammal v.
Authiammal [1910] 33 Mad. 304 and in Gangaraju v. Somanna
A.I.R. 1927 Mad. 197. These come nearer to the present case
than those in Venkatachala Chetty v. Govindaswamy Naicker
A.I.R. 1924 Mad. 605, Thakur Ishri Singh v. Baldas Singh
[1884] 10 Cal. 792 quoted by the appellant. I can see no ground
for holding that the lower appellate Court made any error of law
in regarding Ex. C. on the face of it as a settlement and not a
will."
(emphasis supplied)
16. In Ramaswami Naidu v. Gopalakrishna Naidu (supra), the High
Court laid down the following broad test for construction of document:
"The broad tests or characteristics as to what constitutes a will
and what constitutes a settlement have been noticed in a number
of decisions. But the main test to find out whether the document
20
constitutes a will or a gift is to see whether the disposition of
the interest in the property is in praesenti in favour of the
settlees or whether the disposition is to take effect on the death
of the executant. If the disposition is to take effect on the death
of the executant, it would be a will. But if the executant divests
his interest in the property and vests his interest in praesenti in
the settlee, the document will be a settlement. The general
principle also is that the document should be read as a whole
and it is the substance of the document that matters and not the
form or the nomenclature the parties have adopted. The various
clauses in the document are only a guide to find out whether
there was an immediate divestiture of the interest of the
executant or whether the disposition was to take effect on the
death of the executant."
"If the clause relating to the disposition is clear and
unambiguous, most of the other clauses will be ineffective and
explainable and could not change the character of the
disposition itself. For instance, the clause prohibiting a
revocation of the deed on any ground would not change the
nature of the document itself, if under the document there was
no disposition in praesenti."
(emphasis supplied)
17. In Ramaswami Naidu v. M.S. Velappan and others (1979) 2
M.L.J.88, the Division Bench of the Madras High Court referred to the
documents which were subject matter of consideration before it and
observed:
"In the instant case the first plaintiff was already in charge of
the properties as trustee to perform the obligations created
under it and continued them after the lifetime of Meenakshi
Ammal. There are also positive words whereby it was made
21
clear that the properties should be vested in Velappan and his
heirs for them to enjoy the same absolutely.......
These two dispositive clauses create an interest in praesenti.
The question is whether the postponement of such proprietary
rights already vested in Velappan and his heirs, to the lifetime
of Meenakshi Ammal, would make any difference. The
Explanation to Section 19 of the Transfer of Property Act,
providing that a vested interest is not defeated by the death of
the transferee before he obtains possession, makes the
legislative intent clear that such a vested interest, merely for the
reason that it becomes vested after the lifetime of the settlor,
would not make it a settlement not being in praesenti. We are
therefore unable to agree with the contention that the interest
that Velappan, the first plaintiff, obtained under the instrument
is not a vested one and that it could be defeated because it is
postponed till after the lifetime of Meenakshi Ammal.
In the instant case the document itself is styled as a settlement
deed. It has been registered. The right to enjoy the properties
and secure the benefits and the temple honours as trustee under
it have become a fait accompli even during the lifetime of
Meenakshi Ammal. There is therefore no ambulation in the
matter of the vesting of the interest in the first plaintiff by any
declaration or use of words either express or implied."
(emphasis supplied)
18. In A. Sreenivasa Pai and another v. Saraswathi Ammal alias G.
Kamala Bai (supra), this Court considered whether by virtue of Settlement
Deed executed by appellant A. Sreenivasa Pai in favour of his mother-in-law
Padmavathi Ammal, the latter became absolute owner of the properties
described in the plaint `A' schedule and upon her death, her daughter S.
Lakshmi Ammal acquired title to the said properties under the law of
22
inheritance being the sole heir of the deceased. While dealing with the issue,
the Court referred to the terms of Settlement Deed and held that A.
Sreenivasa Pai desired to give the properties to V. Sreenivasa Pai absolutely
subject to the life interest conferred on Padmavathi Ammal and he had no
intention to give the properties to be enjoyed by Padmavathi Ammal and by
her heirs from generation to generation.
19. In Namburi Basava Subrahmanyam v. Alapati Hymavathi and
others (supra), this Court observed that the nomenclature of the document is
not conclusive and the Court has to find whether the document confers any
interest in the property in praesenti so as to take effect intra vivos and
whether an irrevocable interest thereby is created in favour of the recipient,
all those to be gathered from the recitals of the documents as a whole and
observed:
"The said recital clearly would indicate that the settlement deed
executed on that date is to take effect on that day. She created
rights thereunder intended to take effect from that date, the
extent of the lands mentioned in the Schedule with the
boundaries mentioned thereunder. A combined reading of the
recitals in the document and also the Schedule would clearly
indicate that on the date when the document was executed she
had created right, title and interest in the property in favour of
her second daughter but only on her demise she was to acquire
absolute right to enjoyment, alienation etc. In other words, she
had created in herself a life interest in the property and vested
the remainder in favour of her second daughter. It is settled law
that the executant while divesting herself of the title to the
23
property could create a life estate for her enjoyment and the
property would devolve on the settlee with absolute rights on
the settlor's demise. A reading of the documents together with
the Schedule would give an indication that she had created right
and interest in praesenti in favour of her daughter Vimalavathy
in respect of the properties mentioned in the Schedule with a
life estate for her enjoyment during her lifetime. Thus, it could
be construed rightly as a settlement deed but not as a Will.
Having divested herself of the right and title thereunder, she
had, thereafter, no right to bequeath the same property in favour
of her daughter Hymavathy. The trial court and the learned
Single Judge rightly negatived the claim. The Division Bench
was not, therefore, correct in law in interfering with the decree
of the trial court."
20. In Vynior's case (supra) Lord Coke said "if I make my testament and
last will irrevocable, yet I may revoke it, for my act or my words cannot alter
the judgment of the law to make that irrevocable which is of its own nature
revocable." This statement of law was relied upon by the Division Bench of
Calcutta High Court in Sagar Chandra Mandal v. Digamber Mandal and
others (supra). In that case, the court was called upon to consider the true
character of the instrument which was described as a Will. After noticing
the contents of the documents, the Division Bench referred to Vynior's case
and observed:
"As to the true character of the instrument propounded by the
appellant we think there can be no reasonable doubt that it is a
will. A will is defined in section 3 of the Indian Succession Act
as the legal declaration of the intention of the testator with
respect to his property which he desires to be carried into effect
after his death. Section 49 then provides that a will is liable to
be revoked or altered by the maker of it, at any time when he is
24
competent to dispose of his property by will. If therefore an
instrument is on the face of it of a testamentary character, the
mere circumstance that the testator calls it irrevocable, does not
alter its quality, for as Lord Coke said in Vynior's Case. "If I
make my testament and last will irrevocable, yet I may revoke
it, for my act or my words cannot alter the judgment of the law
to make that irrevocable which is of its own nature revocable."
The principal test to be applied is, whether the disposition made
takes effect during the lifetime of the executant of the deed or
whether it takes effect after his decease. If it is really of this
latter nature, it is ambulatory and revocable during his life.
[Musterman v. Maberley, and in Bonis v. Morgan]. Indeed, the
Court has sometimes admitted evidence, when the language of
the paper is insufficient, with a view to ascertain whether it was
the intention of the testator that the disposition should be
dependent on his death. [Robertson v. Smith]. Tested in the
light of these principles, there can be no doubt that the
instrument now before us is of a testamentary character. It is
described as a will and states explicitly that as after the death of
the testator, disputes might arise among his relations with
regard to the properties left by him, he made the disposition to
be carried into effect after his demise. The terms and
conditions are then set out, paragraph by paragraph, and in each
paragraph the disposition is expressly stated to take effect after
his demise. Against all this, reliance is placed on the sixth
paragraph, in which the testator says that he would be at liberty
to mortgage the properties and not to sell them absolutely.
Such a restraint as this upon his own power of alienation during
his lifetime would be obviously void. It does not indicate any
intention to make the deed irrevocable."
21. In the light of the above, we shall now consider
whether the trial
Court and lower appellate Court rightly treated Ex. A-2 to be a Settlement
Deed and the contrary finding recorded by the learned Single Judge of the
High Court is legally unsustainable. A careful reading of Ex.A-2 shows
that in the title itself the document has been described as Settlement Deed.
25
By executing that document, Shri K. Perumal Iyer expressed his intention, in
no uncertain terms, to settle the property in favour of 16 persons who were
none else than his own relatives and declared that `from this day onwards I
and you shall enjoy the land and house without creating any encumbrance or
making any alienation whatsoever.' This was an unequivocal creation of
right in favour of 16 persons in praesenti. Though, the beneficiaries were to
become absolute owners of their respective shares after the death of the
settlor, the language of the document clearly shows that all of them were to
enjoy the property along with settlor during his lifetime and after his death,
each of the beneficiaries was to get a specified share. In the concluding
portion, the settlor made it clear that he will have no right to cancel the
Settlement Deed for any reason whatsoever or to alter the terms thereof.
The mere fact that beneficiary Nos. 1 and 2 and after them their heirs were
to receive honours at the temple or that shares were to be divided after
disposal of the property cannot lead to an inference that Ex.A-2 was a `Will'.
If Ex.A-2 is read as a whole, it becomes clear that it was a `Settlement Deed'
and the trial Court and the lower appellate Court did not commit any error
by recording a finding to that effect. As a sequel to this, it must be held that
the High Court committed serious error by setting aside the concurrent
judgments and decrees of the two courts.
26
22. The judgments in Vynior's case and those of the Calcutta and Madras
High Courts on which reliance was placed by the learned senior counsel for
the respondents turned on their own facts and cannot be relied upon for
declaring that Ex. A-2 was a `Will'.
23. Although, in their written statement respondent Nos.1 and 2 did plead
that Ex. A-2 was executed by Shri K. Perumal Iyer due to fraud or
misrepresentation, no evidence was led by them to substantiate that
allegation. Therefore, we do not find any valid ground or justification to
entertain that plea.
24. In the result, the appeal is allowed. The impugned judgment is set
aside and those of the trial Court and the lower appellate Court are restored.
The parties are left to bear their own costs.
......................
.......J.
[G.S. Singhvi]
..............................J.
[Asok Kumar Ganguly]
New Delhi
March 15, 2010
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6412 OF 2002
P.K. Mohan Ram ......Appellant
Versus
B.N. Ananthachary and others ......Respondents
JUDGMENT
G.S. Singhvi, J.
1. This is an appeal for setting aside judgment dated 27.2.2001 passed by
the learned Single Judge of Madras High Court in Second Appeal No.
1090/1983 and Civil Miscellaneous Petition No.8137/1983 whereby he
reversed the judgments and decrees of the trial Court and the lower appellate
Court and dismissed the suit filed by the appellant for partition of his 1/17th
share in the suit property.
2
2. Shri K. Perumal Iyer, who owned the suit property, executed
Settlement Deed dated 27.3.1969 in favour of the appellant, respondent
Nos.1 and 2 and 13 others and declared that from the date of execution he
and the beneficiaries shall enjoy the land and house etc. without creating any
encumbrance or making any alienation whatsoever. He further declared that
during his life, he will collect the rental income from the land and house and
after paying the municipal taxes, remaining income would be spent by him
according to his choice; that after his death, the property shall be sold at the
prevailing market price by all 16 beneficiaries and out of the sale proceeds, a
religious trust should be created by paying Rs.4,000/- to Devasthanam of Sri
Prasanna Venkatesa Perumal in the office of the Saurashtra Sabha at
Madurai for the purpose of taking out annual procession of Perumal in the
sacred streets on Amavasai day in the month of Margazhi; that the honors of
the temple should be bestowed upon beneficiary Nos.1 and 2 and, after
them, upon their heirs; that from the sale proceeds, the beneficiaries shall
purchase an immoveable property of Rs.4,000/- in the name of Balu G.
Perumal Iyer Feeding Charities and all 16 trustees shall provide for feeding
of his relatives on the day of the procession of the deity (Perumal) and that if
there is delay in purchasing the immovable property, the beneficiaries shall
be free to advance the money on interest for the purpose of generating
income which could be used for feeding; that his last rites shall be performed
3
by beneficiary Nos.1 and 2 and all 16 persons shall together spend Rs.2000/-
from their personal funds for that purpose. The settlor also indicated that he
had mortgaged the land and house to Ramaseshan and Co. vide Mortgage
Deed dated 24.3.1969 for a sum of Rs.1500/- which shall be redeemed by
him and in the event of death before redemption, all 16 beneficiaries shall
discharge the debt. The settlor further ordained that after deducting
Rs.8,000/- from the sale price, the balance amount should be divided into 17
shares of which beneficiary Nos.1 and 2 shall take three shares and
beneficiary Nos.3 to 16 shall take one share each. If any one of 16
beneficiaries was to die before sale of the property, the remaining persons
were to get absolute right to sell the property. The settlor finally recorded
that he shall have no right whatsoever to cancel the `Settlement Deed' for
any reason whatsoever or alter the terms thereof.
3. Shri K. Perumal Iyer died on 4.12.1972. After his death, the appellant
filed a suit (O.S. No.626/1972) for appointment of receiver to carry out the
directions mentioned in the `Settlement Deed'. The trial Court decreed the
suit, but on appeal, the High Court reversed the decree of the trial Court and
dismissed the suit with an observation that the same shall not operate as res
judicata against the fresh suit which may be filed by the plaintiff (appellant
herein). After disposal of the appeal, the appellant filed O.S. No.858 of
4
1979 for partition of his 1/17th share in the suit property and for grant of a
declaration that in view of the negative covenant contained in the
`Settlement Deed', the settlor had no right to execute Revocation Deed dated
27.2.1970 or Will dated 30.7.1972. In the written statement filed by
defendant Nos.1 and 2 (respondent Nos.1 and 2 herein), it was claimed that
the appellant and his brothers and sisters obtained the `Settlement Deed' by
playing fraud and on discovery thereof, Shri K. Perumal Iyer executed
`Revocation Deed' and then executed the `Will' whereby he bequeathed the
property in their favour. They also pleaded that the suit filed by the plaintiff
(appellant herein) is barred by Order II Rule 2 of the Code of Civil
Procedure (CPC) because the earlier suit filed by him for appointment of
receiver for carrying out the directions contained in the `Settlement Deed'
was dismissed by the High Court in A.S. No. 374/1974.
4. On the pleadings of the parties, the trial Court framed as many as 12
issues including the following:
1. Whether the will in favour of defendants 1 and 2 is valid
and binding?
2. Whether the document dated 27.3.1969 is not a
settlement?
3. Whether the cancellation deed dated 27.2.1970 is true
and valid?
4. Whether the suit is barred by res judicata?
5
5. Whether the suit is barred under Order II Rule 2 of
C.P.C.?
6. Whether the settlement deed was brought into existence
due to fraud and misrepresentation?
5. After considering the pleadings and evidence of the parties and
hearing their advocates, the trial Court vide its judgment dated 24.4.1982
held that document marked Ex.A-2 was `Settlement Deed' and not `Will'
and that the same was not executed as a result of fraud or misrepresentation
and that the settlor did not have the right to execute `Revocation Deed'
Ex.B-2 and `Will' Ex.B-3. The trial Court further held that the second suit
filed by the plaintiff is not barred by res judicata or Order II Rule 2 CPC. In
the end, the trial Court declared that the plaintiff is entitled to partition of the
suit property and accordingly passed a preliminary decree in his favour.
6. Respondent Nos.1 and 2 challenged the judgment and decree of the
trial Court in Appeal Suit No.102/1982, which was dismissed by the lower
appellate Court vide judgment and decree dated 10.3.1983. However, the
second appeal preferred by them was allowed by the learned Single Judge,
who held that even though Ex.A-2 was titled and described as `Settlement
Deed', in reality it was a `Will' executed by late Shri K. Perumal Iyer. The
learned Single Judge further held that the appellant herein has no right in the
6
suit property because the settlor had bequeathed the same in favour of
respondent Nos.1 and 2 herein.
7. Shri R. Sundaravaradhan, learned senior counsel appearing for the
appellant submitted that the impugned judgment is liable to be set aside
because the learned Single Judge misinterpreted Ex.A-2 and held it to be a
`Will' ignoring the specific stipulation contained therein that it was a
`Settlement Deed'. Learned senior counsel referred to Section 19 of the
Transfer of Property Act and argued that the transfer of the property rights in
praesenti coupled with an unequivocal inhibition against
cancellation/amendment thereof clearly shows that Exhibit A-2 was a
`Settlement Deed' and not a `Will'. In support of his arguments, Shri
Sundaravaradhan relied upon the judgments of this Court in Rajes Kanta
Roy v. Santi Debi 1957 SCR 77, A. Sreenivasa Pai and another v.
Saraswathi Ammal alias G. Kamala Bai (1985) 4 SCC 85 and Namburi
Basava Subrahmanyam v. Alapati Hymavathi and others (1996) 9 SCC
388 and of Madras High Court in Gangaraju v. Pendyala Somanna AIR
1927 Madras 197, Venkatasubramaniya Iyer v. Srinivasa Iyer AIR 1929
Madras 670.
7
8. Shri M.S. Ganesh, learned senior counsel appearing for the
respondents supported the impugned judgment and argued that the learned
Single Judge rightly treated Ex.A-2 as a `Will' because the settlor did not
create any right in praesenti in favour of the appellant and the prohibition
contained therein against cancellation/modification of `Settlement Deed'
was not inconsequential. Shri Ganesh emphasized that the rights created in
favour of the beneficiaries were contingent and were to become operative
after the death of the settlor and, as such, the learned Single Judge rightly
treated Ext. A-2 to be a Will. Learned senior counsel placed reliance on the
judgment in Vynior's case, Trin. 7 Jac. 1 Rot. 2629 (printed in the English
Reports, Volume LXXVII, King's Bench Division VI), as also the
judgments of Calcutta and Madras High Courts in Sagar Chandra Mandal
v. Digamber Mandal and others (1909) 9 CLJ 644, Ramaswami Naidu
and another v. Gopalakrishna Naidu and others AIR 1978 Madras 54,
Ponnuchami Servai v. Balasubramanian and others AIR 1982 Madras
281 and Poongavanam v. Perumal Pillai and another (1997) 1 MLJ 169
and argued that interpretation placed by the learned Single Judge on Ex.A-2
is in consonance with the law laid down by this Court and different High
Courts. Shri Ganesh also referred to the judgment of this Court in Rajes
Kanta Roy v. Santi Debi (supra) and submitted that the contingent right, if
8
any, created in favour of the plaintiff-appellant could not be made basis for
treating Ex.A-2 as `Settlement Deed'.
9. For deciding the question raised in this appeal, it will be useful to
notice the contents of Ex.A-2. The English translation of the document
produced by Shri M.S. Ganesh, learned senior counsel for the respondents,
which was accepted by learned senior counsel appearing for the appellant as
correct, reads thus:
"Document No.753/1969
Settlement Deed of land and house property of the value
of Rs.20,000/-
xxxxxxxxxxxxxxxx
The settlement deed executed by me in respect of the land and
house etc. in favour of these 16 persons is as follows: I did not
beget any male or female issue. My wife Ponnammal died
about 3 years ago. In accordance with the terms of the partition
deed dated 29.1.1937, bearing Ramanthapuram R.O.1 162.43 to
48. 701/1937 between my brothers Balu K. Ramaswamy Iyer
and Balu K. Nannaiyer and me, I got as my share the
undermentioned land and house etc. valued at Rs.20,000/-.
Since then I have been in uninterrupted possession and
enjoyment of the same on payment of municipal taxes and so
on. You 16 persons being my relatives and considering your
welfare and mine and out of my love and affection for you, I
settle this property on you 16 persons by executing this
settlement deed. From this day onwards I and you shall enjoy
the under mentioned land and house etc. without creating any
encumbrance or making any alienation whatsoever. During my
lifetime I shall collect the rental income from the under
mentioned land and house etc. and after paying the municipal
taxes, with the remaining income I shall spend my life as I wish
till the end of my days. After my death, you 16 persons shall
9
become eligible and have absolute right to sell the under
mentioned land and house at the prevalent market price. Out of
the sale proceeds thus received, you should create a religious
trust by paying Rs.4,000/- to the Devasthanam of Sri Prasanna
Venkatesa Perumal in the office of the Saurashtra Sabha at
Madurai for the purpose of taking out annual procession of
Perumal in the sacred streets on Amavasai day in the month of
Margazhi. The honors at the temple should be bestowed upon
persons 1 and 2 among you and after them upon their heirs.
Further, from the sale proceeds, you should purchase an
immoveable property for Rs.4,000/- in the name of Balu G.
Perumal Iyer Feeding Charities and you 16 persons as trustees
should provide for feeding of my relations on the day of the
procession of the deity (Perumal). Should there be any delay in
purchasing the immovable property, you 16 persons would be
fully entitled to advance money on interest or by mortgage to
generate income for the feeding. Upon my death, whoever
among 1 and 2 of you is present shall perform my last rites and
all you 16 persons shall together spend upto Rs.2,000/-from
your personal funds for that purpose. During my life time, I
myself shall redeem the mortgage of the undermentioned land
and house which I had mortgaged to Rameseshan & Co. of
Madurai by a mortgage deed dated 24.3.1969 for a sum of
Rs.1500/-. In the event I die before redeeming the mortgage,
you 16 persons shall discharge that debt. As mentioned above,
after deducting Rs.8,000/- from the sale price, the balance
amount should be divided into seventeen shares. 1 and 2
among you shall take three shares, 3 to 16 among you shall take
one share each. 1 and 2 among you shall divide the three shares
equally between you. If anyone of you 16 persons dies before
the sale of the property, the remaining persons excluding the
deceased shall have the absolute right to sell the property. I
shall have no right whatever to cancel this settlement deed for
any reason whatsoever or to alter these terms. I execute this
settlement deed of my own free will."
(emphasis supplied)
10
10. Sections 19 and 21 of the Transfer of Property Act, 1882 (for short,
`the 1882 Act') which elucidate the expressions "vested interest" and
"contingent interest" in the context of transfer of property read as under:
"19. Vested interest.- Where, on a transfer of property, an
interest therein is created in favour of a person without
specifying the time when it is to take effect, or in terms
specifying that it is to take effect forthwith or on the happening
of an event which must happen, such interest is vested, unless a
contrary intention appears from the terms of the transfer.
A vested interest is not defeated by the death of the
transferee before he obtains possession.
Explanation.- An intention that an interest shall not be vested is
not to be inferred merely from a provision whereby the
enjoyment thereof is postponed, or whereby a prior interest in
the same property is given or reserved to some other person, or
whereby income arising from the property is directed to be
accumulated until the time of enjoyment arrives, or from a
provision that if a particular event shall happen the interest shall
pass to another person.
21. Contingent interest. - Where, on a transfer of property, an
interest therein is created in favour of a person to take effect
only on the happening of a specified uncertain event, or if a
specified uncertain even shall not happen, such person thereby
acquires a contingent interest in the property. Such interest
becomes a vested interest, in the former case, on the happening
of the event, in the latter, when the happening of the event
becomes impossible.
Exception. - Where, under a transfer of property, a person
becomes entitled to an interest therein upon attaining a
particular age, and the transferor also gives to him absolutely
the income to arise from such interest before he reaches that
age, or directs the income or so much thereof as may be
necessary to be applied for his benefit, such interest is not
contingent."
11
A reading of the plain language of the above reproduced sections makes it
clear that an interest can be said to be a vested interest where there is
immediate right of present enjoyment or a present right for future
enjoyment. An interest can be said to be contingent if the right of enjoyment
is made dependent upon some event which may or may not happen. On the
happening of the event, a contingent interest becomes a vested interest.
11. In Rajes Kanta Roy v. Santi Debi (supra), this Court considered the
distinction between `vested interest' and `contingent interest' in the
backdrop of dispute between the widow and two sons of Ramani Kanta Roy,
who possessed considerable properties. Two suits filed by the parties in
relation to the suit property ended in compromise decrees. On account of
the alleged violation of compromise decree, Santi Debi filed an application
for execution and prayed for issue of a direction for release of the arrears of
her monthly allowances. She also prayed for attachment and sale of the
immovable properties. Appellant, Rajes Kanta Roy filed objections under
Section 47 of the Code of Civil Procedure. The same were rejected by the
Subordinate Judge. Appeal filed by him was dismissed by the Calcutta High
Court. One of the questions considered by this Court was whether the
interest created by the deed executed by Ramani Kanta Roy was a vested or
12
contingent interest. The Court referred to Sections 19 and 21 of the Transfer
of Property Act and Sections 119 and 120 of the Indian Succession Act,
Williams on Executors and Administrators (13th Edition) Vol.2, p.658,
Jarman on Wills (8th Edition) Vol.II, p.1390 and p.1373 and observed:
"Apart from any seemingly technical rules which may be
gathered from English decisions and text-books on this subject,
there can be no doubt that the question is really one of
intention to be gathered from a comprehensive view of all the
terms of a document. Learned Solicitor-General frankly
admitted this, and also that a court has to approach the task of
construction in such cases with a bias in favour of a vested
interest unless the intention to the contrary is definite and clear.
It is, therefore, necessary to consider the entire scheme of the
deed of trust in the present case, having regard to the terms
therein, and to gather the intention therefrom."
The Court then referred to different portions of the deed executed by
Ramanai Kanta Roy and observed:
"Now, there can be no doubt about the rule that where the
enjoyment of the property is postponed but the present income
thereof is to be applied for the benefit of the donee the gift is
vested and not contingent. (See Explanation to s.19 of the
Transfer of Property Act, Explanation to s.119 of the Indian
Succession Act. See also Williams on Executors and
th
Administrators, 13 Ed., Vol.2, p.663, para.1010, and Jarman
on Wills, 8th Ed., Vol.II, p.1397). This rule operates normally
where the entire income is applied for the benefit of the donee.
The distinguishing feature in this case is that it is not the entire
income that is available to the donee for their actual use but
only a portion thereof. But it is to be observed that according to
the scheme of the trust deed, the reason for limiting the
enjoyment of the income to a specified sum thereof, is
obviously in order to facilitate and bring about the discharge of
the debts. As already explained the underlying scheme of the
13
trust deed is that the enjoyment is to be restricted until the debts
are discharged. Whatever may be said of such a provision
where a donee is not himself a person who is under any legal
obligation aliunde to discharge such debts, the position in this
case is different. The two sons are themselves persons who, if
the settlor died intestate, would be under an obligation to
discharge his debts out of the properties which devolve upon
them. It is only the surplus which would be legally available
for division between them. In such a case, the balance of the
income which is meant to be applied for the discharge of the
debts is also an application of the income for the benefit of the
donees. It follows that the entire income is to be applied for the
benefit of the donee and only the surplus, if any is available to
the donees. Hence the provision in the trust deed that lots I to
IV are to devolve on Rajes and lot V on Ramendra and that the
surplus income of each of these lots after the discharge of the
debts is also to devolve in the same way, clearly operates as
nothing more than the present allotment of these properties
themselves to the donees subject to the discharge of debts
notionally in the same proportion. Thus, taking the substance
of the entire scheme of this division between the two sons the
position that emerges is as follows. (1) Specified lots are ear-
marked for each of the two sons. (2) The present income out of
those lots is to be applied for the discharge of the debts after
payment of specified sums therefrom by way of monthly
payments to the two sons and presumably such application is to
be notionally pro rata. (3) Any surpluses which remain from
out of the income of each of the lots are to go to the very person
to whom the corpus of the lot itself is to belong on the
termination of the trust. (4) In the event of any of the two sons
dying before the termination of the trust, his interest in the
monthly payments out of the income is to devolve on his heirs.
These arrangements taken together clearly indicate that what is
postponed is not the very vesting of the property in the lots
themselves but that the enjoyment of the income thereof is
burdened with certain monthly payments and with the
obligation to discharge debts therefrom notionally pro rata, all
of which taken together constitute application of the income for
his benefit.
14
It may be noticed at this stage that one of the features of a
contingent interest is that if a person dies before the
contingency disappears and before the vesting occurs, the heirs
of such a person do not get the benefit of the gift. But the trust
deed in question specifically provides in the case of Rajes -
with whose interest alone we are concerned - that even in the
event of his death it is his heirs (then surviving) that would take
the interest. It has been urged that the provision in cl.12(a) in
favour of the heirs then surviving is in the nature of a direct gift
in favour of the heir or heirs who may be alive at the date when
the contingency disappears. But even so, this would make no
practical difference. It is to be remembered that in this case the
parties belong to the Dayabhaga school of Hindu Law - and
this is admitted before us. It is also to be remembered that up to
the third degree in the male line the principle of representation
under the Hindu Law operates. The net result of the provision,
therefore, is that whenever the alleged contingency of discharge
of debts may disappear the person on whom the interest would
devolve would, in the normal course, be the very heir (the lineal
descendant then surviving or the widow) of Rajes. The actual
devolution of the interest, therefore, would not be affected by
the alleged contingency. That being so, it is more reasonable to
hold that the interest of Rajes under the deed is vested and not
contingent.
This view is confirmed by the fact that under the
compromise decree which is now sought to be executed, both
the judgment-debtors, Rajes and Ramendra, created a charge
for the monthly payment to Santi Devi and agreed to such
charge being presently executable. This shows clearly that they
themselves understood the interest available to them under the
trust as a vested interest."
(emphasis supplied)
12. In Usha Subbarao v. B.N. Vishveswaraiah (1996) 5 SCC 201, a
two-Judge Bench was called upon to consider whether the appellant is
entitled to share of her husband in the properties left by her father-in-law,
15
Dr. N.S. Nanjundiah on the basis of a Will executed by him. The appellant
pleaded that the respective shares of the sons of the testator including her
husband vested in them as per the Will and after the death of her husband,
she is entitled to the share of her husband. The trial Court held that the
succession opened on the death of the testator by virtue of which all his sons
became entitled to equal shares in the properties and the recital in the Will
that the partition should take place amongst the surviving children after the
death of Smt.Nadiga Nanjamma is really intended to refer to the children
surviving the testator. This view of the trial Court was reversed by the High
Court and the suit was dismissed. This Court referred to Sections 19 and 21
of the 1882 Act, Sections 119 and 120 of the Indian Succession Act and
reiterated one of the propositions laid down in Rajes Kanta Roy v. Santi
Devi (supra) by making the following observations:
"Although the question whether the interest created is a vested
or a contingent interest is dependent upon the intention to be
gathered from a comprehensive view of all the terms of the
document creating the interest, the court while construing the
document has to approach the task of construction in such cases
with a bias in favour of vested interest unless the intention to
the contrary is definite and clear."
The ratio of the above noted two judgments was followed in another two-
Judge Bench in Kokilambal v. N. Raman (2005) 11 SCC 234.
16
13. Having noticed the distinction between vested interest and contingent
interest, we shall now consider whether Ex.A-2 was a Settlement Deed or a
Will. Although, no strait-jacket formula has been evolved for construction
of such instruments, the consistent view of this Court and various High
Courts is that while interpreting an instrument to find out whether it is of a
testamentary character, which will take effect after the life time of the
executant or it is an instrument creating a vested interest in praesenti in
favour of a person, the Court has to very carefully examine the document as
a whole, look into the substance thereof, the treatment of the subject by the
settlor/executant, the intention appearing both by the expressed language
employed in the instrument and by necessary implication and the
prohibition, if any, contained against revocation thereof. It has also been
held that form or nomenclature of the instrument is not conclusive and the
Court is required to look into the substance thereof.
14. Before proceeding further, we may notice the judgments on which
reliance was placed by learned counsel for the parties. In Gangaraju v.
Pendyala Somanna (supra), the learned Single Judge was called upon to
construe deed dated 27.2.1917 executed by one Kristnamma. The learned
Single Judge referred to the contents of the document and observed:
17
"The document on the face of it is of a non-testamentary
character. It was so stamped and so registered. It is called a
dakal dastaveju, which means a conveyance or settlement deed.
It is true that a document which is not a Will in form, may yet
be a Will in substance and effect; but as was held in Mahadeva
Iyer v. Sankarasubramania Iyer (1), if an instrument is a deed in
form, in order to hold that it is testamentary or in the nature of a
Will, there must be something very special in the case; and
unless there are circumstances which compel the Court to treat
an instrument in the form of a deed as a Will, the Court will not
do so. The leading argument of the appellant is that the
document created no estate in praesenti. A more literal
translation of the fourth sentence in para 2 of the document is:
Therefore, on account of my affection for you, I have
arranged that after my death the property shall belong to
you.
It is certainly very difficult to derive from these words any
immediate interest crated in favour of the plaintiff. But the line
between a Will and a conveyance reserving a life estate is a fine
one, and it would be hard to define in some cases where the
document has been held to be non-testamentary, wherein the
personal interest which was transferred consists. A more easily
applied test is that of revocability. There is nothing in the suit
document to show that Kristnamma reserved the right to revoke
it. On the contrary there is an undertaking not to alienate any
part of the property during his lifetime. I consider that this is
equivalent to a promise not to revoke the instrument, because if
the executant intended to reserve that right he could not
consistently have parted with the right to alienate. The same
intention to give finality to the deposition is suggested by Ex.3,
which is a conveyance of a portion of the property executed
jointly by Kristnamma and the plaintiff. The fact that the
plaintiff was required to join is significant, and in the schedule
the property is described as that which was conveyed by
Kristnamma to him. This document seems also to lend some
colour to the view that an immediate conveyance of interest
was intended in Ex.F. I think that Kristnamma had the
intention not to revoke the conveyance and this has always been
regarded as one of the most important tests."
(emphasis supplied)
18
15. In Venkatasubramaniya Iyer v. Srinivasa Iyer (supra), the question
considered was whether the document marked Exhibit - C is a Settlement or
a Will. The learned Single Judge answered the question in the following
words:
"....A question of that kind is one that has to be decided
primarily on the terms of the document itself. It was executed
by a widow, the mother of the plaintiff, and is styled a
settlement in favour of the plaintiff. It recites certain family
arrangements by which certain moveables are divided between
the widow and the plaintiff, and the widow retains certain
immovable property for herself. It deals with property to an
extent of over three velis left to her by her husband under his
will absolutely and recites that, in respect of that on account of
the request made to her by her son for the benefit of his minor
son, the present defendant and out of favour to himself and in
consideration of the arrangement that he would not during her
lifetime encumber or alienate the rights that would come to him
in the property after her death, she on her side undertakes to
meet all her own expenses till her death out of the income and
not to alienate the property. Thus the document prohibits both
parties from alienating the rights retained or given thereby. It
directs that after the widow's death, the plaintiff and his heirs
shall enjoy the property with all absolute rights. It further
provides that if the widow fails to pay the kist on the property,
the plaintiff shall pay and may recover from her out of her
income, and that the pattah for the property shall be transferred
to the plaintiff. The document is styled a settlement and
registered.
It is contended by the appellant that the document is a will since
the only operative portion of it is that which bequeaths the
property to the plaintiff and his heirs after the death of the
widow. Both the lower Courts have rejected this contention and
19
held the document to be a settlement. I think it is clear from the
tenor of the document that it is not a will. It mentions
considerable property which is not disposed of by it at all. It
does more than bequeath property to the plaintiff after the
widow's death. He obtains by it certain rights in presenti, for
example, the right as covenanted with him that the widow will
not alienate the property during her lifetime. He himself is
given the right to recover the unpaid kists from her income and
to have the pattah transferred to his name. There is no language
indicating that the widow was retaining with her any power to
revoke the document, while the surrender of her right to
alienate during her lifetime indicates that she did not reserve
any power to revoke. These points combined with the facts that
the parties intended the document to be a settlement and styled
it as such and that it was handed over to the plaintiff and not
retained with the widow are sufficient to indicate that the
widow was merely retaining a life-interest in the property and
was transferring to the plaintiff the vested remainder. It is not of
much help to refer to reported rulings in a case of this kind
when the decision has to be based on the wording of a
particular document, but documents of very similar wordings
were held to be settlements and not wills in Rajammal v.
Authiammal [1910] 33 Mad. 304 and in Gangaraju v. Somanna
A.I.R. 1927 Mad. 197. These come nearer to the present case
than those in Venkatachala Chetty v. Govindaswamy Naicker
A.I.R. 1924 Mad. 605, Thakur Ishri Singh v. Baldas Singh
[1884] 10 Cal. 792 quoted by the appellant. I can see no ground
for holding that the lower appellate Court made any error of law
in regarding Ex. C. on the face of it as a settlement and not a
will."
(emphasis supplied)
16. In Ramaswami Naidu v. Gopalakrishna Naidu (supra), the High
Court laid down the following broad test for construction of document:
"The broad tests or characteristics as to what constitutes a will
and what constitutes a settlement have been noticed in a number
of decisions. But the main test to find out whether the document
20
constitutes a will or a gift is to see whether the disposition of
the interest in the property is in praesenti in favour of the
settlees or whether the disposition is to take effect on the death
of the executant. If the disposition is to take effect on the death
of the executant, it would be a will. But if the executant divests
his interest in the property and vests his interest in praesenti in
the settlee, the document will be a settlement. The general
principle also is that the document should be read as a whole
and it is the substance of the document that matters and not the
form or the nomenclature the parties have adopted. The various
clauses in the document are only a guide to find out whether
there was an immediate divestiture of the interest of the
executant or whether the disposition was to take effect on the
death of the executant."
"If the clause relating to the disposition is clear and
unambiguous, most of the other clauses will be ineffective and
explainable and could not change the character of the
disposition itself. For instance, the clause prohibiting a
revocation of the deed on any ground would not change the
nature of the document itself, if under the document there was
no disposition in praesenti."
(emphasis supplied)
17. In Ramaswami Naidu v. M.S. Velappan and others (1979) 2
M.L.J.88, the Division Bench of the Madras High Court referred to the
documents which were subject matter of consideration before it and
observed:
"In the instant case the first plaintiff was already in charge of
the properties as trustee to perform the obligations created
under it and continued them after the lifetime of Meenakshi
Ammal. There are also positive words whereby it was made
21
clear that the properties should be vested in Velappan and his
heirs for them to enjoy the same absolutely.......
These two dispositive clauses create an interest in praesenti.
The question is whether the postponement of such proprietary
rights already vested in Velappan and his heirs, to the lifetime
of Meenakshi Ammal, would make any difference. The
Explanation to Section 19 of the Transfer of Property Act,
providing that a vested interest is not defeated by the death of
the transferee before he obtains possession, makes the
legislative intent clear that such a vested interest, merely for the
reason that it becomes vested after the lifetime of the settlor,
would not make it a settlement not being in praesenti. We are
therefore unable to agree with the contention that the interest
that Velappan, the first plaintiff, obtained under the instrument
is not a vested one and that it could be defeated because it is
postponed till after the lifetime of Meenakshi Ammal.
In the instant case the document itself is styled as a settlement
deed. It has been registered. The right to enjoy the properties
and secure the benefits and the temple honours as trustee under
it have become a fait accompli even during the lifetime of
Meenakshi Ammal. There is therefore no ambulation in the
matter of the vesting of the interest in the first plaintiff by any
declaration or use of words either express or implied."
(emphasis supplied)
18. In A. Sreenivasa Pai and another v. Saraswathi Ammal alias G.
Kamala Bai (supra), this Court considered whether by virtue of Settlement
Deed executed by appellant A. Sreenivasa Pai in favour of his mother-in-law
Padmavathi Ammal, the latter became absolute owner of the properties
described in the plaint `A' schedule and upon her death, her daughter S.
Lakshmi Ammal acquired title to the said properties under the law of
22
inheritance being the sole heir of the deceased. While dealing with the issue,
the Court referred to the terms of Settlement Deed and held that A.
Sreenivasa Pai desired to give the properties to V. Sreenivasa Pai absolutely
subject to the life interest conferred on Padmavathi Ammal and he had no
intention to give the properties to be enjoyed by Padmavathi Ammal and by
her heirs from generation to generation.
19. In Namburi Basava Subrahmanyam v. Alapati Hymavathi and
others (supra), this Court observed that the nomenclature of the document is
not conclusive and the Court has to find whether the document confers any
interest in the property in praesenti so as to take effect intra vivos and
whether an irrevocable interest thereby is created in favour of the recipient,
all those to be gathered from the recitals of the documents as a whole and
observed:
"The said recital clearly would indicate that the settlement deed
executed on that date is to take effect on that day. She created
rights thereunder intended to take effect from that date, the
extent of the lands mentioned in the Schedule with the
boundaries mentioned thereunder. A combined reading of the
recitals in the document and also the Schedule would clearly
indicate that on the date when the document was executed she
had created right, title and interest in the property in favour of
her second daughter but only on her demise she was to acquire
absolute right to enjoyment, alienation etc. In other words, she
had created in herself a life interest in the property and vested
the remainder in favour of her second daughter. It is settled law
that the executant while divesting herself of the title to the
23
property could create a life estate for her enjoyment and the
property would devolve on the settlee with absolute rights on
the settlor's demise. A reading of the documents together with
the Schedule would give an indication that she had created right
and interest in praesenti in favour of her daughter Vimalavathy
in respect of the properties mentioned in the Schedule with a
life estate for her enjoyment during her lifetime. Thus, it could
be construed rightly as a settlement deed but not as a Will.
Having divested herself of the right and title thereunder, she
had, thereafter, no right to bequeath the same property in favour
of her daughter Hymavathy. The trial court and the learned
Single Judge rightly negatived the claim. The Division Bench
was not, therefore, correct in law in interfering with the decree
of the trial court."
20. In Vynior's case (supra) Lord Coke said "if I make my testament and
last will irrevocable, yet I may revoke it, for my act or my words cannot alter
the judgment of the law to make that irrevocable which is of its own nature
revocable." This statement of law was relied upon by the Division Bench of
Calcutta High Court in Sagar Chandra Mandal v. Digamber Mandal and
others (supra). In that case, the court was called upon to consider the true
character of the instrument which was described as a Will. After noticing
the contents of the documents, the Division Bench referred to Vynior's case
and observed:
"As to the true character of the instrument propounded by the
appellant we think there can be no reasonable doubt that it is a
will. A will is defined in section 3 of the Indian Succession Act
as the legal declaration of the intention of the testator with
respect to his property which he desires to be carried into effect
after his death. Section 49 then provides that a will is liable to
be revoked or altered by the maker of it, at any time when he is
24
competent to dispose of his property by will. If therefore an
instrument is on the face of it of a testamentary character, the
mere circumstance that the testator calls it irrevocable, does not
alter its quality, for as Lord Coke said in Vynior's Case. "If I
make my testament and last will irrevocable, yet I may revoke
it, for my act or my words cannot alter the judgment of the law
to make that irrevocable which is of its own nature revocable."
The principal test to be applied is, whether the disposition made
takes effect during the lifetime of the executant of the deed or
whether it takes effect after his decease. If it is really of this
latter nature, it is ambulatory and revocable during his life.
[Musterman v. Maberley, and in Bonis v. Morgan]. Indeed, the
Court has sometimes admitted evidence, when the language of
the paper is insufficient, with a view to ascertain whether it was
the intention of the testator that the disposition should be
dependent on his death. [Robertson v. Smith]. Tested in the
light of these principles, there can be no doubt that the
instrument now before us is of a testamentary character. It is
described as a will and states explicitly that as after the death of
the testator, disputes might arise among his relations with
regard to the properties left by him, he made the disposition to
be carried into effect after his demise. The terms and
conditions are then set out, paragraph by paragraph, and in each
paragraph the disposition is expressly stated to take effect after
his demise. Against all this, reliance is placed on the sixth
paragraph, in which the testator says that he would be at liberty
to mortgage the properties and not to sell them absolutely.
Such a restraint as this upon his own power of alienation during
his lifetime would be obviously void. It does not indicate any
intention to make the deed irrevocable."
21. In the light of the above, we shall now consider
whether the trial
Court and lower appellate Court rightly treated Ex. A-2 to be a Settlement
Deed and the contrary finding recorded by the learned Single Judge of the
High Court is legally unsustainable. A careful reading of Ex.A-2 shows
that in the title itself the document has been described as Settlement Deed.
25
By executing that document, Shri K. Perumal Iyer expressed his intention, in
no uncertain terms, to settle the property in favour of 16 persons who were
none else than his own relatives and declared that `from this day onwards I
and you shall enjoy the land and house without creating any encumbrance or
making any alienation whatsoever.' This was an unequivocal creation of
right in favour of 16 persons in praesenti. Though, the beneficiaries were to
become absolute owners of their respective shares after the death of the
settlor, the language of the document clearly shows that all of them were to
enjoy the property along with settlor during his lifetime and after his death,
each of the beneficiaries was to get a specified share. In the concluding
portion, the settlor made it clear that he will have no right to cancel the
Settlement Deed for any reason whatsoever or to alter the terms thereof.
The mere fact that beneficiary Nos. 1 and 2 and after them their heirs were
to receive honours at the temple or that shares were to be divided after
disposal of the property cannot lead to an inference that Ex.A-2 was a `Will'.
If Ex.A-2 is read as a whole, it becomes clear that it was a `Settlement Deed'
and the trial Court and the lower appellate Court did not commit any error
by recording a finding to that effect. As a sequel to this, it must be held that
the High Court committed serious error by setting aside the concurrent
judgments and decrees of the two courts.
26
22. The judgments in Vynior's case and those of the Calcutta and Madras
High Courts on which reliance was placed by the learned senior counsel for
the respondents turned on their own facts and cannot be relied upon for
declaring that Ex. A-2 was a `Will'.
23. Although, in their written statement respondent Nos.1 and 2 did plead
that Ex. A-2 was executed by Shri K. Perumal Iyer due to fraud or
misrepresentation, no evidence was led by them to substantiate that
allegation. Therefore, we do not find any valid ground or justification to
entertain that plea.
24. In the result, the appeal is allowed. The impugned judgment is set
aside and those of the trial Court and the lower appellate Court are restored.
The parties are left to bear their own costs.
......................
.......J.
[G.S. Singhvi]
..............................J.
[Asok Kumar Ganguly]
New Delhi
March 15, 2010
