PETITIONER:
DILHARSHANKAR C. BHACHECHA
Vs.
RESPONDENT:
THE CONTROLLER OF ESTATE DUTY, AHMEDABAD
DATE OF JUDGMENT08/01/1986
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
TULZAPURKAR, V.D.
CITATION:
1986 AIR 1707 1986 SCR (1) 94
1986 SCC (1) 701 1986 SCALE (1)6
ACT:
Estate Duty Act, 1953 sections 2(15), 2(16), 2(19), 6
and 29 - Interpretation of the words "paid" and "since" in
section 29 - Joint will and mutual will - Conditions
necessary to render mutual will irrevocable - The theory of
contemporaneous exposition and construction of the will in
question.
HEADNOTE:
The appellant Dilharshankar C. Bhachech being one of
the grand-sons of the deceased Kamlashankar Gopalshankar and
a legatee under a joint will of his grand parents is the
accountable person under the Estate Duty Act, 1953. The
deceased and his wife Mahendraba each possessed certain
properties which were of their own individual ownership.
They were also jointly possessed of certain properties
including a bungalow known as "Dilhar Dwar" - situated in
the Ellisbridge area of Ahmedabad. On 24th December, 1950
the deceased and his wife had made a joint will in respect
of the said bungalow. Mahendraba, one of the executants of
the joint will died on 3rd January, 1954. On the death of
Mahendraba, estate duty on her share of the property which
passed on her death to her husband Kamlashankar has been
duly paid. Kamlashankar the other executant to the joint
will died, thereafter on 25th October, 1964. Upon his death,
the appellant-cum-accountable person-cum-sole executor and
trustee paid estate duty to the remaining extent of 50% on
the properties as mentioned in the joint will of the
deceased Mahendraba and Kamlashankar. The appellant
accountable persons in the returns filed contended; (i)
since the property in question was settled by the joint will
in favour of the grandsons and since duty had been paid on
the death of one of the joint executants to the will, duty
on the second death of the deceased was not payable on the
whole estate by virtue of the provisions of section 29 of
the Estate Duty Act; (ii) that on a true construction of the
will, the deceased was neither at the time of his death nor
any time during the continuance of the settlement, the full
owner of the share of the property of Mahendraba because he
had only a
95
life interest therein to receive rents and profits from that
share, and therefore, exemption contemplated by section 29
of the Act came into force and hence no etate duty with
regard to the share of Mahendraba on the death of the
deceased Kamlashankar arose for the second time. The Revenue
was of the opinion that on the death of Mahendraba, the
wife, her husband had become the sole owner of the property
in question, as is evident from the wealth tax returns filed
by him and therefore, exemptions under section 29 of the Act
cannot be claimed.
Both the Assistant Controller of Estate Duty Ahmedabad
as well as the Appellate Controller held against the
accountable person, taking the view that section 29 of the
Estate Duty Act was not applicable. Full amount of the
Estate Duty was collected from the accountable person. In an
appeal before the Tribunal, the Tribunal on the construction
of the will held in favour of the accountable person, for
the reason that Kamlashankar did not become the full owner
of the share of the property of Mahendraba on her death.
At the instance of the Revenue the Tribunal referred
the matter to the High Court of Gujarat. While refusing to
interpret the word "since" narrowly as contended by the
Revenue, the High Court, however, answered on the
construction of the will in its favour holding that "there
was no agreement of irrevocability and the survivor took an
absolute interest in the whole of the property and as such
section 29 would have no application to the facts of the
case. Hence the appeal by certificate.
Allowing the appeal by certificate.
Allowing the appeal, the Court.
^
HELD: 1 The interpretation sought for by the Revenue
was highly artificial and against the spirit of section 29.
Looking at the language and the spirit of section 29 of the
Estate Duty Act, 1953, it was clear that the expression "If
the estate duty has already been paid --- since the date of
the settlement", occurring in the first part thereof, meant
"if the estate duty has become payable or has been paid
either simultaneously with the creation of the settlement or
at any time thereafter." The dictionary meaning of the word
"since" is wide enough. Section 29 comes into operation only
on the death of the surviving spouse, the obvious intention
of
96
the Legislature in framing the section being to avoid double
duty. Even if the word "paid" was used in wider context and
not in the literal sense, it could not be interpreted as
excluding its literal meaning, namely, the actual fact of
payment having already been made. Here, on the facts, the
duty had been "paid" since the date of the settlement. [104
A-E]
Coutts & Co. v. Inland Revenue Commissioner [1962] 2
All E.R. 521 at 527 quoted with approval.
1.2 Whether a person in "competent to dispose of" of
the property and within the meaning of section 6 of the
Estate Duty Act, 1953, would naturally depend on the terms
and conditions under which the property is either acquired
or inherited. The expression "competent to dispose of" must
bear the ordinary meaning in the English language. A person
shall be deemed to be competent to dispose of the property
if he has every power or authority enabling the donee or
other holder thereof to appoint or dispose of the property
as he thinks fit. [118 D]
1.3 The question of strict construction of the taxing
statute and the principle that one who claims exemption must
strictly come within the purview is not relevant in the
instant case because the exemption follows on the
interpretation of the will. In the instant case whether the
deceased Kamlashankar had the disposing power over the share
of the property of Mahendraba, his wife, acquired by him
would depend not on how he has treated it but the true
effect of the will. There is no question of contemporaneous
conduct because the conduct of one of the parties subsequent
to the death of one of the executants long after the
execution of the will cannot be described as contemporaneous
conduct. The question of "contemporaneous exposition" by
conduct of the parties in the facts of this case does not
arise. [119 E; 116 B-C]
2.1 A joint will is a single testamentary instrument
containing the wills of two or more persons and jointly
executed by them, while mutual wills are separate wills of
two or more persons which are reciprocal in their provisions
and executed in pursuance of contract or agreement between
two or more persons to dispose of their property to each
other or to third persons in particular mode or manner.
Mutual wills as distinguished from joint wills are sometimes
described as reciprocal wills. In order to render mutual
will irrevocable,
97
both the conditions must be concurrently satisfied: (a) that
the surviving testator must have received benefits from the
deceased under the mutual will; (b) the mutual wills should
have been executed in pursuance of an agreement that the
testator shall not revoke the mutual wills. Such an
agreement not to revoke the wills may either appear from the
wills themselves or may be proved outside the wills, but
that is not established by the mere fact that the wills are
in identical terms. If such an agreement is shown, each
party remain bound. [113 D-F; 114 A-C]
A different and separate agreement must be spelled out
not to revoke the will after the death of one of the
executants. That agreement must be clear, though need not be
by a separate writing but must follow as a necessary
implication which would tantamount to an express agreement.
[118 H; 119 A]
2.2 In the instant case it is clear;
(a) The will in question was a mutual will; [108 B]
(b) Reading the different clauses of the said will it
was manifest that the intention was to keep the property as
it was at the time of execution of the will so that the
ultimate beneficiaries and the grandsons might enjoy the
property with such modifications as the contingencies of
time and situation might require; [108 A-B]
(c) Before the death of the first of the executants,
the agreement remained contractual one in consideration of
mutual promises. It could have been at that stage revoked by
mutual agreement or even by unilateral breach, giving rise
at the most to an action for damages. But after the death of
first one without revoking his or her own will makes the
joint will irrevocable by the survivor. But there must be an
agreement that the wills would not be revoked after the
death of one of the executants or disposition will not be
made contrary to the will after the death of one of the
executants; [109 C-D, E]
(d) The predominant intention of the executants at the
time of the execution, after the acceptance of the benefit
of the execution makes the will in this case irrevocable by
the survivor of the executants; [119 A-B]
(e) In the facts and circumstances of this case,
because of the specific clause that it was intended that the
grandsons
98
would receive the benefit in species and there being no
provision for making up the deficiency or diminution if any,
it must follow that there was mutuality and Kamlashankar was
not competent to dispose of the property in any manner
contrary to the ultimate disposition; [119 B-C]
(f) The fact that estate duty was paid is non sequitur;
[119 D]
(g) The payment of wealth-tax by Kamlashankar
Gopalshankar on the whole estate after the death of
Mahendraba is no relevant; and [119 D]
(h) The husband Kamalshankar received the benefit under
the will after the death of Mahendraba. It became
irrevocable by him after her death with the result that he
had no disposing power over the share of Mahendraba in the
property. In the premises being a "settled property" estate
duty having been paid on the death of one of the parties,
the accountable person was entitled to exemption under
section 29 of the Act. [119 F-G]
Dufour v. Pereira, [1769] 21 E.R. 332; In re: Oldham,
1925 Ch.75; Gray v. Perpetual Trustee Co. Ltd. [1928] A.C.
391 at 399 & 400; Re Parsons, Parsons v. Attorney-General,
[1942] 2 All E.R. 496; and Bhawani Prasad v. Smt. Surendra
Bala W/o Subodh Chandra and Anr. A.I.R. 1960 Allahabad 126
discussed and distinguished.
Kuppuswami Raja v. Perumal Raja A.I.R. 1964 Madras 291
approved.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 679
(NT) of 1974.
From the Judgment and order dated 19/20-12-73 of the
Gujarat High Court in Estate Duty Reference No.2 of 1972.
V.S. Desai, Dilhar C. Bhachech, Naunit Lal, Kailash
Vasudev and Mrs. Vinod Arya for the Appellant.
S.C. Manchanda, C.M. Lodha and Miss. A. Subhashini for
the Respondent.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. In this appeal by certificate
by the High Court under article 133(1) of the Constitution
99
against the judgment and order of the High Court of Gujarat
dated 19/20th December, 1973 in Estate Duty Reference No. 2
of 1972, the question involved is regarding exemption from
estate duty under section 29 of the Estate Duty Act, 1953
(hereinafter called the `Act’),which contemplates exemption
from duty in cases where estate duty has been paid on
settled property on the death of one of the parties to a
marriage.
The appellant is the accountable person and he is
related to the deceased Shri Kamlashankar Gopalshankar
Bhachech as one of his grand sons. Deceaed Kamlashankar
Gopalshankar died on 25th October, 1964. The deceased had a
wife named Mahendraba Kamlashankar Bhachech. The deceased
and a his wife each possessed certain properties which were
of their own individual ownership. They were also jointly
possessed of certain properties including a bungalow known
as ‘Dilhar Dwar’ – situated in the Ellisbridge area of
Ahmedabad. The dispute in the reference out of which this
appeal arose was with regard to estate duty leviable on 1/2
share of the wife of the deceased in the said bungalow and
the land appertaining thereto.
On 24th December, 1950, the deceased and his wife had
made a joint will in respect of the said bungalow. They also
made separate wills with regard to their individually owned
properties on the same date with which this appeal is not
concerned.
The aforesaid bungalow is situated on Plot Nos. 825 and
appertaining to its main structure there are blocks bearing
Nos. 48/2 to 48/6. In addition to the blocks, there is a
garage, a bath room and two latrines as also some open
compound land appertaining to the main structure. All these
properties were disposed of by the joint will executed by
the deceased and his wife. The relevant portion of the joint
will is as under:-
“During our life time we shall continue to be
joint owners of the land bungalow and blocks with
their common bath room and two privies including
the garage bearing No. 48/1 and shall be jointly
entitled to the rents and income of the said land
and blocks and the user and rent of the bungalow.
After the death of one of us, the survivor shall
become the owner of the said land bungalow and
100
blocks including the garage No. 48/1 with the said
bath room and privies and shall become entitled to
the rents and income and user of the said land
bungalow and blocks including garage No. 48/1 and
the bath room and privies. The provisions
hereinafter contained shall become effective after
the death of the survivor of us. After the death
of the survivor of us, hereby devise and bequeath
our said furnished Bungalow including all things,
articles, furniture, utensils, fixtures etc.
together with the portion of the land and compound
walls delineated on the plan hereto annexed and
coloured red and marked ‘B’ to our grandson Dilhar
shankar Chintanvanshankar Bhachech. We hereby
devise the bequeath our block Nos. 48/2 to 48/6
including garage bearing No. 48/1 with the said
bath room and privies together with the portion of
the land and compound walls delineated on the plan
hereto annexed and coloured blue and marked ‘C’ to
our Grandson Snehitshankar Chintavanshankar
Bhachech. We hereby devise and bequeath the
portion of the open land and the compound walls
delineated on the plan hereto annexed and coloured
green and marked ‘A’ to our grandson Hasitshankar
Drupad shankar Bhachech.”.
Mahendraba Kamlashankar Bhachech one of the executants
of the Joint Will died on 3rd January, 1954. On the death of
Mahendraba, estate duty on her share of the property which
passed on her death to Kamlashankar Gopalshankar has been
duly paid. This is an admitted position. Kamlashankar
Gopalshankar died, thereafter, on 25th October, 1964. Upon
his death, the appellant cum accountable person cum sole
executor and trustee paid estate duty to the remaining
extent of 50% on the properties mentioned in the above
mentioned joint will of the husband and the wife. The case
of the revenue was that on the death of Mahendraba, the
wife, the deceased Kamlashankar Gopalshankar, the husband,
had become the sole owner of the property in question and
that he had filed his wealth tax returns accordingly. The
case of the appellant-accountable person was that since the
property in question was settled by the joint will in favour
of the grandsons and since duty had been paid on the death
of one of the joint executants to the will, duty on the
second death of the deceased was not payable on the whole
estate by virtue of the provisions of section 29
101
of the Act. It was further contended that on a true
construction of the will, the deceased was neither at the
time of his death nor any time during the continuance of the
settlement, the full owner of the share of the property of
Mahendraba because he had only a life interest therein to
receive rents and profits from that share, and, therefore,
exemption contemplated by section 29 of the Act came into
force and the revenue was not entitled to levy any estate
duty with regard to the share of Mahendraba on the death of
the deceased, Kamlashankar Gopalshankar. The question,
therefore, that arose before the revenue authorities as well
as the High Court, was, whether the appellant herein was
liable to pay estate duty on 1/2 share which the deceased
possessed or on the whole including the share which the wife
of the deceased had in the property.
Both the Assistant Controller of Estate Duty, Ahmedabad
as well as the Appellate Controller held against the
accountable person and further held that section 29 of the
Act was not applicable. Full amount of the estate duty was
collected from the accountable person. There was an appeal
before the Tribunal. The Tribunal on the construction of the
will held in favour of the accountable person. The Tribunal
held that the deceased Kamlashankar Gopalshankar did not
become the full owner of the share of the property of
Mahendraba on her death.
At the instance the revenue, the Tribunal referred the
following question of law to the High Court:
“Whether, on the facts and in the circumstances of
the case, the Tribunal was right in holding that
the respondent is entitled to the full benefit
conferred by section 29 and that as such no estate
duty in respect of the half share in the joint
property which originally belonged to late
Mahendraba, the wife of the deceased is payable by
the respondent?”
The aforesaid reference was answered by the High Court
in favour of the respondent by its judgment and order dated
19/20th December, 1973 and gave a certificate of fitness of
appeal to this Court.
It is necessary in this connection to refer to section
29 of the Act which reads as follows:
102
“Settled property in respect of which since the
date of the settlement estate duty has been paid
on the death of the deceased’s spouse.
29. If estate duty has already been paid in
respect of any settled property since the date of
the settlement, on the death of one of the parties
to a marriage, the estate duty shall not be
payable in respect thereof on the death of the
other party, to the marriage, unless the latter
was at the time of his death, or had been at any
time during the continuance of the settlement,
competent to dispose of such property, and, if on
his death subsequent limitations under the
settlement take effect in respect of such
property, was sui juris at the time of his death,
or had been sui juris at any time while so
competent to dispose of the property.”
‘Settled property’ has been defined in section 2(19) of
the Act as follows:-
“2. In this Act, unless the context otherwise
requires,-
x x x x x
x x x x x
(19) “settled property” means property which
stands limited to, or in trust for, any persons,
natural or juridical, by way of succession,
whether the settlement took effect before or after
the commencement of this Act; and “settlement”
means any disposition, including a dedication or
endowment, whereby property is settled.”
Section 2(15) states:
“‘Property’ includes any interest in property,
movable or immovable, the proceeds of sale thereof
and any money or investment for the time being
representing the proceeds of sale and also species
into another by any methos.”
Section 2(16) states:
“‘Property passing on the death’ includes property
passing either immediately on the death or after
103
any interval, either certainly or contingently,
and either originally or by way of substitutive
limitation, and “on the death” includes “at a
period ascertainable only by reference to the
death.”
Section 5 provides for levy of the estate duty in the
case of every person dying after the commencement of the Act
upon the principal value ascertained in the manner
stipulated therein. Section 6 states that the property which
the deceased was at the time of his death competent to
dispose of shall be deemed to pass on his death. Section 6
is important in this connection because in order to attract
the levy of the estate duty, the deceased should have been
competent to dispose of the property. Therefore what law
requires is that the deceased whose death attracts the duty
must have had disposing power at the time of his death. One
of the important questions involved in this appeal is
whether the deceased Kamlashankar Gopalshankar had disposing
power over the entirety of the property which was the
subject matter of the will by the joint executants.
Two contentions were urged before the High Court. The
first contention was on the correct interpretation of
section 29 of the Act and the second contention was on the
true construction of the joint will made by the deceased
Kamlashankar Gopalshankar and his wife Mahendraba in the
year 1950. On the first point, the provision of section 29
of the Act has been noticed. It was submitted on behalf of
the revenue before the High Court that section 29 came into
operation only where the estate duty had become payable
“since the date of the settlement”. It was contended that
the expression “Since the date of the settlement” clearly
indicated that the settlement in question should first come
into existence and duty should have become payable
subsequent to the coming into existence of the settlement.
The revenue pointed out that in the instant case it was
contended by the accountable person that the settlement in
favour of the grandsons came into existence on the death of
Mahendraba, then it was not possible to accept the position
that liability to pay estate duty came into existence
subsequent to the settlement because any liability to pay
the estate duty would also come into existence exactly at
the moment of the death of the deceased.
It was pointed out on behalf of the revenue that
“settlement” and “liability to pay estate duty” both had
come into existence simultaneously on the death of
Mahendraba and
104
if that was so, section 29 had no application to the facts
of this case. It was urged on behalf of the revenue before
the High Court that the word “paid” should be read as
“payable” while construing section 29 of the Act. This
interpretation which the revenue wanted to place on the
section was confined only to the first part thereof which
stated that ‘the estate duty has already been paid’ in
respect of settled property since the date of the settlement
on the death of one of the parties to the marriage, then the
estate duty shall not be payable in respect thereof on the
death of the other party to the marriage. This argument was,
however, not accepted by the High Court. The High Court
observed that looking at the language and the spirit of the
section, it was clear that the expression “if the estate
duty has already been paid….since the date of the
settlement” meant” if the estate duty had become payable or
has been paid either simultaneously with the creation of the
settlement or at any time thereafter”. So the High Court
emphasised that the dictionary meaning of the word “since”
is wide and the fact is that section comes into operation
only on the death of the surviving spouse and the obvious
intention of the legislature in framing the section was to
avoid double duty. That intention, the court observed, would
be frustrated if the word “since” was interpreted narrowly
as contended for by the revenue. Even if the word “paid” was
used in wider context and not in the literal sense, it could
not be interpreted as excluding its literal meaning, namely
the actual fact of payment having already been made. The
High Court was of the view that interpretation sought for by
the revenue was highly artificial and against the spirit of
the section. We are in agreement with the High Court on this
point. The High Court referred to the analogous provision of
section 5(2) of the English Statute and followed the
observations of Upjohn L.J. in Coutts & Co. v. Inland
Revenue Commissioner, [1962] 2 All E.R. 521 at 527. We are
also in respectful agreement with the said observations
referred to by the High Court and on the facts, it must be
held that the duty had been “paid” since the date of the
settlement. No submission to the contrary was made before
us.
The second contention was on the construction of the
will. Construing the will in the surrounding circumstances
and in the light of the language used the High Court was of
the view that there was no agreement that the survivor shall
not revoke the will or do anything to diminish the quantum
of the property going into the hands of the subsequent
legatees.
105
Therefore the deceased as survivor took absolute interest in
the property and section 29 of the Act would have no
application to this case. The question was accordingly,
answered in favour of the revenue and in the negative.
The construction of the will is the main question in
this appeal. Whether the accountable person is liable to pay
estate duty on full value of the whole property i.e. the
share belonging to Mahendraba as well as Kamlashankar
Gopalshankar would depend upon the construction of the will
in question read in the light of section 29 of the Act. The
section to be applied requires payment of estate duty, in
respect of the ‘settled property’ on the death of one of the
parties to the marriage. Whether property in question here
was settled property or not would depend upon the
construction of the will.
The question that fell for consideration by the High
Court and also falls for consideration in this Court is
whether the deceased Kamlashankar Gopalshankar who survived
his wife, one of the joint executants to the will, was
competent to dispose of the share of Mahendraba which he had
inherited under the said will. Therefore, the question is
what is the true meaning and effect of the will? Did the
deceased Kamlashankar Gopalshankar have any ‘disposing
power’ over the property which is the subject matter of the
will?
On behalf of the accountable person, it was contended
that the Will in question was not merely a joint Will but a
Will which was joint as well as mutual containing reciprocal
agreements between the parties making the Will and therefore
the deceased Kamlashankar Gopalshankar had no power in his
life time to revoke or alter the disposition made in the
Will or to do anything inter vivos after the death of
Mahendraba which would have gone against the ultimate
disposition indicated in the Will. It was submitted that
there was an implicit agreement between the deceased and his
wife, that on the consideration of each other agreeing to
bequeath his or her share in the property in favour of the
survivors each undertook not to do anything which would
render the subsequent and ultimate bequest in favour of
grandsons ineffective. And if such was the agreement, it
must follow that what the deceased received as a legatee was
not full ownership right of disposal but only a limited
interest in the share of the wife and this would be so even
when both executants and the survivor were described in the
Will as “owner”.
106
It was submitted that if this construction of the Will
was accepted, there came into existence a resulting
settlement in favour of the grandsons on the death of the
wife and hence the property became ‘settled property’ within
the meaning of section 2(19) of the Act. It was pointed out
that if it was accepted as a’settled property’, the
accountable person was entitled to exemption under section
29 of the Act because admittedly duty was once paid on it on
the death of Mahendraba in the year 1954. Reliance was
placed before the High Court on behalf of the accountable
person on the decision in the case of Dufour v. Pereire,
[1769] 21 E.R. 332, as well as Kuppuswami Raja v. Perumal
Rama, A.I.R. 1964 Madras 291.
According to the revenue on the other hand, the Will
was joint one pure and simple and there was no evidence of
any mutuality. It was contended that there was enough
evidence in the language of the will itself to show that the
survivor was to acquire full ownership rights over the
property and was therefore competent at all times on the
first death to revoke the Will or dispose of the property
inter vivos.
The High Court on an exhaustive consideration of all
the relevant judgments and authorities came to the
conclusion that there was no evidence to prove any agreement
not to revoke the Will after the death of one of the
executants. The High Court was of the view that there was no
external evidence and so far as the internal evidence was
concerned, it appeared to the High Court that each of the
executants might have thought that it was quite safe to
trust the other and to believe that having regard to their
ages and their affection for the grand children who were the
ultimate beneficiaries, nothing was likely to occur in the
near future which would substantially diminish the property
taken by the survivor who can be trusted to give effect to
the wishes of the deceased. Therefore, according to the High
Court, there was no agreement of irrevocability and the
survivor took an absolute interest in the whole of the
property and as such section 29 would have no application to
the facts of this case. In that view of the matter, the High
Court answered the question in the negative and in favour of
the revenue.
It is the correctness of that decision which is under
challenge in this appeal. The sole question in the
background of the provisions of the relevant sections namely
section 29 read with other sections that have been referred
to herein-
107
before, is, whether it was merely a joint Will or it was a
joint and mutual Will or in other words there was agreement
implied between the parties namely the executants of the
Will not to revoke the Will after the death of one of the
executants. It is, therefore, appropriate to refer to the
relevant provisions of the Will. The Will was jointly
executed by Kamlashankar Gopalshankar and Mahendraba on 24th
December, 1950 and described as “last joint Will and
testament”. They appointed the accountable person the
apppellant herein, as ‘our Executor’. The Will thereafter
goes on to say:
“We are that joint owners of a Bungalow known as
‘Dilhar Dwar’ situate at Ellis Bridge, Pritam
Nagar bearing Plot No. 825, Bungalow No. 48/A. In
addition to the main bungalow there are certain
other blocks bearing Nos. 48/2 to 48/6 and one
garage bearing No. 48/1 which is below Block No.
48/2 and a common bath room and two privies for
blocks No. 48/2 to 48/6. We have been in
possession of the land, the bungalow and the
blocks for many years past. We are in actual
occupation of the main bungalow. The other blocks
except the garage bearing No. 48/1 and Block No.
48/5 are rented to tenants. The garage bearing No.
48/1 is for the present allowed by us to be used
by our permission and leave and licence by our son
Chintvanshankar Kamlashankar Bhachech without
payment of any sum.”
Then the will goes on to make the bequest in
favour of the three grandsons in terms set our
hereinbefore.
The will thereafter goes on to provide in detail for
the contingencies that might happen in case where either by
the rules of the Town Planning Scheme or the Municipal Laws
the portions of the property need and require alterations.
The will further stipulates in detail about the payment of
the house taxes in respect of the properties coming to the
shares of each of their grandsons, and even in respect of
the areas built by them. The will further stipulates that
for the purpose of partitioning the land as demarcated on
the plan there to annexed and referred to above if there was
any obstruction on the land going to the share of each of
their grandsons which encroached upon the portion or
portions coming to the share of other grandson or grandsons
the same should be removed by the person or persons whose
encroachment or obstruction, it may be.
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Reading the different clauses of the said joint will it
was manifest that the intention was to keep the property, as
it was at the time of execution of the will so that the
ultimate beneficiaries and the grandsons may enjoy the
property in full with such modifications as the
contingencies of time and situation might require.
In this background it is necessary to find out whether
the Will in question was a joint will only or a joint and
mutual Will.
Theobald on ‘Wills’, Twelfth Edition, pages 28 & 29 at
paras 79 & 80 describes the difference thus:
“Joint wills. Persons may make joint wills, which
are, however, revocable at any time by either of
them or by the survivor. A joint will is looked
upon as the will of each testator, and may be
proved on the death of one. But the survivor will
be treated in equity as a trustee of the joint
property if there is a contract not to revoke the
will; but the mere fact of the execution of a
joint will is not sufficient to establish a
contract not to revoke. So a legacy to a legatee
who survived the first testator, but predeceased
the second, did not lapse. Where a joint will is
followed by a separate will which is conditional
on a condition that fails, the joint will is not
revoked even though the subsequent separate will
contains a revocation clause.
Mutual wills. The term “mutual wills” is used to
describe separate documents of a testamentary
character made as the result of an agreement
between the parties to create irrevocable
interests in favour of ascertainable
beneficiaries. The revocable nature of the wills
under which the interests are created is fully
recognised by the Court of Probate; but in certain
circumstances the Court of Equity will protect and
enforce the interests created by the agreement
despite the revocation of the will by one party
after the death of the other without having
revoked his will.
The Court of Equity will not protect the
beneficiary under mutual wills merely because they
have been made in almost identical terms. There
must be
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evidence of an agreement to create interests under
the mutual wills which are intended to be
irrevocable after the death of the first to die.
Where there is no such evidence the fact that the
survivor takes an absolute interest is a factor
against the implication of such agreement. Where,
however, the evidence is clear, as, for example,
where it is contained in recitals in the wills
themselves, the fact that each testator gave the
other an absolute interest with a substitutional
gift in the event of the other’s prior death does
not prevent the Court of Equity from affording its
protection to the beneficiary under the mutual
wills. The agreement must also be sufficiently
precise to be enforced by the Court.
Before the death of the first to die, the
agreement is a contractual one made in
consideration of mutual promises. It can,
therefore, at this stage be revoked by mutual
agreement and even by unilateral breach, giving
rise to an action for damages at least where the
revoking party gives such notice to the other as
may enable him to alter his will also. But on
general principles only the parties to the
agreement can sue for damages for unilateral
breach.”
Earl Jowitt in the Dictionary of English Law, 1st Edn.
Second Impression 1965 at page 1283, referes to the
definition of ‘owner’ under Public Health 1936 and the
Factories Act, 1937 as a person for the time being receiving
the rack-rent of the premises in connection with which the
word is used, whether on his own account or as agent or
trustee. Jowitt also defines ‘ownership’ as the most
extensive right allowed by law to a person, of dealing with
a thing to the exclusion of all other persons, or of all
except one or more specified persons. It is therefore a
right in rem.
Stroud’s Judicial Dictionary 4th Edn. Vol.3 page 1907
deals with the concept of ‘owner’ and ‘ownership’ in
different statutes of England.
Halsbury’s Laws of England, 4th Edn., Vol. 50 at pages
95 & 96, paras 207 & 208 deals more or less in the same
manner about joint will and mutual will. But at page 108,
para 221 it states the law thus:
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“221. Restrictions by taking a benefit under a
mutual will. Mutual wills may be made, either by a
joint will or by separate wills, in pursuance of
an agreement that they are not to be revoked. Such
an agreement may appear from the wills, or may be
proved outside the wills, but it is not
established by the mere fact that the wills are in
identical terms. If no such agreement is shown,
each party remains free to revoke his will, if
there are separate wills, or to revoke the joint
will, so far as it disposes of his property, and
the fact that one party has died without revoking
the disposition of his property does not prevent
the survivor from revoking the disposition which
he has made notwithstanding that he has received
benefits out of the estate of the deceased party.
Even when there is such an agreement and one party
has died after departing from it by revoking or
altering the will, the survivor having notice of
the breach cannot claim to have the later will set
aside, since the notice gives him the chance of
altering the will as regards his own property; and
the death of the deceased party is itself
sufficient notice for this purpose. It, however,
the deceased has stood by the agreement and not
revoked or altered his will, the survivor is bound
by it, and although probate will be granted of a
later will made by him in breach of the agreement,
since a court of probate is only concerned with
the last will, the personal representatives of the
survivor nevertheless hold his estate in trust to
give effect to the provisions of the joint will or
mutual wills.”
Jarman on Wills in 8th Edn. at page 42 states the
position of mutual wills thus:
“The fact that a husband and wife have
simultaneously made mutual wills, giving each to
the other a life interest with similar provisions
in remainder, is not in itself evidence of an
agreement not to revoke the wills; in the absence
of a definite agreement to that effect there is no
implied trust precluding the wife from making a
fresh will inconsistent with her former will, even
though her husband has died and she has taken the
benefits conferred by his will. Although by the
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mutual wills the wife expressly has refrained from
exercising a power of appointment, which her
husband had only in default of her exercising it,
and he has appointed, the wife can both take the
benefit of her husband’s will and exercise her
power of appointment, unless the language of his
will either puts her to her election, or place her
in the position of seeking at the same time to
approbate and reprobate its provisions.
The joint executants have been described as joint
owners. Again the said clause goes on to use the expression
‘during our life time we shall continue to be the joint
owners’ ‘and shall be jointly entitled to the rents and
income of the said land and blocks and the user and rent of
the bungalow. The Will goes on to say that after the death
of one of them ‘survivor shall become the “owner” of the
said land bungalow and blocks including the garage with the
said bath room and privies and shall become entitled to the
rents and income and user of the said land bungalow and
block’s. The provisions contained in the said will were
stipulated to be effective after the death of the survivor
of them. After the death of the survivor the will went on to
use the expression “we hereby devise and bequeath our said
furnished bungalow…..” Then the will made detailed
provisions for the enjoyment of the property in specific
species.
In re Oldham, 1925 Ch. 75, the husband and wife had
made mutual wills in the same form in pursuance of an
agreement so as to make them but there was no evidence of
any further agreement in the matter. Each gave his or her
property to the other absolutely with the same alternative
provisions in case of lapse. The wife having survived and
accepted her husband’s property under the mutual will
subsequently married again, and made a fresh will ignoring
the alternative provisions of her own mutual will. The
plaintiff in that case contended that from the agreement to
make mutual wills in the form in which they were made, the
survivor who had accepted the benefit under the mutual
agreements became thereby subject to alternative trusts
mentioned in the mutual wills. Reliance was placed on Dufour
v. Pereira (supra). Reference was made to the observations
of Astbury J. in that where the learned judge observed that
in order to enforce the trust, the judge must be satisfied
that there was a term irrevocable and in such
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circumstances he was to give effect to the same. But the
learned judge was unable having read the will to find any
mutuality in that form in the will in question. This
decision found favour with the Gujarat High Court. In the
instant case before us, it has to be noted that the will in
question was in one document and furthermore the desire to
give properties in species to the grandsons was manifest
from the entirety of the will.
It would be evident from the said will that the joint
properties of the deceased husband and the wife were
delineated into three parts and each of the parts were
bequeathed to three grandsons in species i.e. in specific
demarcated areas. One other significant fact to be borne in
mind, in view of the contentions involved in this appeal, is
the fact that there was no provision in the will whereby if
one of the properties or one of the parts of the said
properties was parted away or diminished before the death of
both the executants (this is important because the will was
to take effect on the death of both the executants), there
was no provision that any part which got diminished during
the life time of one of the executants, he should be
compensated other-wise from any other part of the said
properties or any other assets of the estate of the
executants which were the subject matter of the will.
Reliance was placed in Gray v. Perpetual Trustee Co.
Ltd.,[1928] A.C. 391 at 399 & 400. In that case it was held
that the fact that husband and wife simultaneously made
mutual wills giving life interest with similar provisions in
the remainder was not in itself evidence to an agreement not
to revoke the wills.
The use of the expression ‘owner’ is really not the
solution of the problem before us in this appeal. In one
context the expression ‘owner’ has been used to indicate the
limited ownership to be enjoyed by the survivor of the joint
executants and in another context to the ultimate legatees
or the beneficiaries.
Clause 5 of the will is suggestive that it was in the
contemplation of the executants as to what would happen to
certain amounts lying to their credit at the time of the
death of the survivor in the event of the death of the
grandson before the death of the survivor of the executants.
It
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provided that in that event the amounts would go to the
heirs according to law of the grandson named therein. These
properties were again in clause 7 described as ‘joint
properties’.
It would be material to refer, apart from the clauses
which have been set out hereinbefore, to certain other
clauses namely clause 2 of the will, the relevant portion of
which has been set out hereinbefore in its entirety. Clause
3 deals with the situation when if any of the grandsons or
the heirs wanted to sell his or their portion of building at
any time. Clause 4 also dealt with the situation if one of
the grandsons died during their life time and before the
death of the survivor what would happen? Clause 5 has been
referred to hereinbefore. Clause 6 deals with certain
movable properties. Clause 7 dealt with separate properties.
It is evident from the aforesaid that property in
species, in specific proportion, was intended to be
preserved and enjoyed by the ultimate legatee on the death
of the survivors.
In Kuppuswamy Raja v. Perumal Raja (supra), it was
observed that a joint will is by a single testamentary
instrument containing the wills of two or more persons and
jointly executed by them, while mutual wills, are separate
wills of two or more persons which are reciprocal in their
provisions and executed in pursuance of contract or
agreement between two or more persons to dispose of their
property to each other to third person in particular mode or
manner. Mutual wills as distinguished from joint wills are
sometimes described as reciprocal wills. In describing a
will, the adjective mutual or reciprocal is used to denote
the contractual element which distinguished from a joint
will. It was stated therein by the Division Bench of the
Madras High Court that joint will would become irrevocable
on the death of one of the testators if the survivor
received benefit under the will. The Court emphasised
referring into certain decisions of this court that a joint
will would become irrevocable on the death of one of the
testators if the survivor has received benefit under the
mutual will. There need not be any specific contract
prohibiting evocation when the agreement took the form of
not two simultaneous mutual wills but one single document.
If one single document was executed using the expression
‘our property’, ‘our present wishes’, and ‘as will’ and such
similar expressions, it was strong cogent evidence of the
intention that there was no power to revoke except by mutual
consent.
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In order to render mutual will irrevocable, both,
according to the said decision, the conditions must be
concurrently satisfied:
(a) that the surviving testator must have received
benefits from the deceased under the mutual will; (b) the
mutual wills should have been executed in pursuance of an
agreement that the testators shall not revoke the mutual
wills. Such an agreement not to revoke the wills may either
appear from the wills themselves or may be proved outside
the wills. This judgment was dissented from by the judgment
under appeal.
Reliance was placed on the decision of the Allahabad
High Court in Bhawani Prasad v. Smt. Surendra Bala W/o
Subodh Chandra and another, A.I.R. 1960 Allahabad 126. In
that case, by the will both the executants, husband and wife
were devising the property of which each was the owner, in
the first instance to whoever survived, and thereafter both
of them devised the property ‘belonging to us’ to the
petitioners. There was an assertion of absolute ownership in
the house made by the wife, and an assertion made by both
executants that the deposits in the bank constituted money
‘belonging to us the executants’. The items aforesaid,
according to the will, were to remain in the absolute
possession and enjoyment of the executants during their life
time and thereafter to be disposed of in the manner
indicated in the will. The last clause, clause (4) of the
will indicated that the executants would have the right to
amend or cancel the will, but nobody else would have that
right. It was found that the exercise of the right of the
power reserved by clause (4) was not made dependent by this
clause on the co-existence of both the executants. It was
held on the construction of reading of the will that after
the death of the husband, the wife could revoke the part of
the will by gifting away the house to another during her
life time. The fact that the wife had benefitted from the
will of the husband would not destroy her power of revoking
her will because her will was quite an independent
transaction. The deed of gift could not be taken to have
revoked the will of the husband but only the will of the
wife. The case was really decided in terms of the facts and
circumstances of that case and wordings of the will.
In the case of Re Parsons, Parsons v. Attorney General,
[1942] (2) All E.R. 496, the testatrix gave a legacy of L-
10,000 to her husband absolutely, and she also gave the
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income of her residuary estate on trust for her huaband for
life and after his death on trust for her son absolutely.
The husband disclaimed the legacy by a formal deed of
disclaimer and the legacy fell into residue. On the
husband’s death the revenue authorities claimed estate duty
in respect of the legacy on the ground that although the
husband had disclaimed the legacy, he was competent to
dispose of it and the liability to duty was not, therefore,
excluded by the Finance Act, 1948. It was held that during
the period between the death of the testatrix and the date
of the disclaimer the husband was ‘competent to dispose’ of
the legacy within the meaning of the Act. Whether a person
is competent to dispose of naturally would depend on the
terms and conditions under which the property is either
acquired or inherited. The expression ‘competent to dispose
of’ must bear the ordinary meaning in the English language.
A person shall be deemed to be competent to dispose of the
property if he has every power or authority enabling the
donee or other holder thereof to appoint or dispose of the
property as he thinks fit.
A contention was raised in this connection whether this
being an exemption provision from duty, it should be so read
as to lean in favour of the assessee.
The questions whether such a clause should be construed
in favour of the assessee or in favour of the revenue in
case of doubt or the question whether section 29 being
exemption clause in respect of payment of duty on settled
property, the onus is on the assessee to come strictly
within the purview of that clause or the question how should
such a provision be construed really do not arise. There is
not much difficulty or ambiguity on the construction of
section 29 of the Act. The question involved in this case is
the construction of the will in question. Was it only a
joint will executed jointly by two of the executants or was
it a joint and a mutual will? In aid of the submissions that
an exemption clause must be strictly construed in favour of
the State cases were cited which need not therefore be
noticed.
Reference was made to Cross ‘Statutory Interpretation’
on construction on the theory of contemporaneous exposition
reliance being placed on the conduct of the parties i.e. the
deceased and treated the half share of the wife in the
property in question as his own and had filed wealth tax
returns on the same basis.
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These principles are also well settled. But these
principles will not strictly be applicable in the instant
case because this appeal is concerned with the construction
of the will in question and the will in question must be
construed in such a manner as to find out the true intention
of the executants or the testator and testatrix. For that it
is well settled that will must be read as a whole. Secondly
the expression must be read consistently.
One has to bear in mind that we are concerned with the
construction of the will and the true effect of the
provisions thereof. Whether the deceased Kamlashankar
Gopalshankar had the disposing power over the share of the
property of Mahendraba, his wife, acquired by him would
depend not on how he has treated it but the true effect of
the will. Furthermore there is no question of
contemporaneous conduct because the conduct of one of the
parties subsequent to the death of one of the executants
long after the execution of the will cannot be described as
‘contemporaneous conduct’. We need not, therefore, detain
ourselves on the question of ‘contemporaneous exposition’ by
conduct of the parties in the facts of this case.
Therefore the will must be construed in its proper
light and there must be definite agreement found from the
tenor of the will or aliunde that either of the joint
executants would not revoke the will after receiving the
benefit under the will. Such definite agreement need not be
express; it can be implied. The terms of the will have been
set out exhaustively. It was undoubtedly a joint will. The
property in question has been described as ‘our property’.
The expression ‘owner’ has also been used in the manner
indicated in the sentence ‘During our life time we shall
continue to be the joint owners of the land bungalow and
blocks with their common bath room and two privies….and
shall be jointly entitled to the rents and income of the
said land and blocks and the user and rent of the bungalow’.
The will goes on further to say that on the death of one of
them, the survivor shall become the ‘owner of user of the
said land bungalow and blocks including garage….. ‘
Therefore it is clear that the ownership which the joint
executants contemplated was the user during the life time
and entitlement to the rents and income of the same. It is
this ownership which was to pass on the death of either of
them to the survivor and the will thereafter goes on to say
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that ‘the provisions hereinafter contained shall become
effective after the death of the survivor of us’. And
thereafter after the death it is provided “we hereby devise
and bequeath our said furnished bungalow……. ” The gift
of the property to the three grand children as owners in
full sense is to take effect on the death of the survivor of
both the executants. It is clear that the property was
intended to be kept in tact for the enjoyment of the
ultimate legatees and during the life time of either of them
the property would not in any way be parted with or
diminished. This intention, expressed in the implied terms
in the bargain in the will, in our opinion, would be
fortified by devising the property to three grand children
in species i.e. in specific form and not providing for any
money or compensation for diminution of any part thereof
before coming into effect of the will in question. If that
is the position then, in our opinion, there is a definite
agreement not to revoke the will by one of the executants
after he or she has received the benefit under the will on
the death of either of them.
Indubitably in the instant case the husband has
received the benefit under the will of the wife. He could
not have during his life time parted with the property i.e.
he did not have the disposing power over the properties in
question after the death of the wife.
It was emphasised that there was no evidence of
mutuality. But there was enough evidence in the language of
the will itself which have been set out hereinbefore that
the property must remain in tact specially after receipt of
benefit by one of the executants on the death of the other
until the death of both of them to be able to be succeeded
by the ultimate legatees. The dominant intention of the
testators is evidenced from the language used. This must be
judged in the facts and circumstances of each case. It was
not only that on certain basis that the will was made but it
was intended to remain intact to be enjoyed by the grand
children. The fact that both the executants have described
themselves ‘joint owners’ is not by itself conclusive on
this point nor the use of the expression ‘that the survivor
shall become the owner’ is conclusive. On the other hand the
detailed provisions in species to be effective after the
death of the survivor in different portions to be given to
the different grand sons without any provision as to what
was to happen in case of the diminution of the property
within the life time of either of the survivor make the will
‘mutual wills’.
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In our opinion the dominant intention is clear i.e. the
will may be revoked during the life time of both the
executants but after the death of one of the executants and
after benefit had been received by the survivor, the
property in question must remain intact to be enjoyed by the
grand children by the terms of the will which was to become
effective on the death of both of the executants.
We are of the opinion that definite intention must be
there but such intention need not be expressed in a separate
document than the will itself. If from the will in question
such a definite intention and a separate agreement can be
spelled out then in our opinion it would be a case of joint
and mutual will.
In view of the above discussion, the following
propositions follows:
1. Whether estate duty was payable on the whole of the
property or not would depend on whether the deceased
Kamlashankar Gopalshankar had ‘disposing power’ over the
share of Mahendraba inherited by him on her death or not?
2. The above question would depend on the construction
of the joint will-did it create any mutuality among the
executants of the joint will? Whether Kamlashankar
Gopalshankar having accepted the benefit and after his
wife’s death, was competent to do anything contrary to the
ultimate bequest? Before the death of the first of the
executants, the agreement remained contractual one in
consideration of mutual promises. It could have been at that
stage revoked by mutual agreement or even by unilateral
breach, giving rise at the most to an action for damages.
But after the death of the first one without revoking his or
her own will makes the joint will irrevocable by the
survivor (See Theobald (supra). But there must be an
agreement that the wills would not be revoked after the
death of one of the executants or disposition will not be
made contrary to the will after the death of one of the
executants. Such an agreement may appear from the will or
may be proved outside the will but that is not established
by the mere fact that the wills are in identical terms. If
such an agreement is shown, each party remain bound.
3. A different and separate agreement must be spelled
out not revoke the will after the death of one of the
executants. That agreement must be clear though need not by
a
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separate writing but must follow as a necessary implication
which would tentamount to an express agreement.
4. The predominant intention of the executants at the
time of the execution, after the acceptance of the benefit
of the execution makes the will in this case irrevocable by
the survivor of the executants.
5. Judged by the principles indicated above, in the
facts and circumstances of this case, we are of the opinion
because of the specific clause that it was intended that the
grandsons would receive the benefit in species and there
being no provision for making up the deficiency or
diminution if any, it must follow that there was mutuality
and Kamlashankar Gopalshankar was not competent to dispose
of the property in any manner contrary to the ultimate
disposition.
6. The fact that estate duty was paid is non sequitur.
7. The payment of wealth tax by Kamlashankar
Gopalshankar on the whole estate after the death of
Mahendraba is not relevant.
8. The question of strict construction of the taxing
statute and the principle that one who claims exemption must
strictly come within the purview is not relevant in this
case because the exemption follows on the interpretation of
the will.
In that view of the matter we are of the opinion that
this was a mutual will. The husband Kamlashankar
Gopalshankar received the benefit under the will after the
death of Mahendraba. It became irrevocable by him after her
death. Therefore he had no disposing power over the share of
Mahendraba in the property. In the premises being a ‘settled
property’, estate duty having been paid on the death of one
of the parties, the accountable person was entitled to
exemption under section 29 of the Act. In the premises the
High Court was not right in its conclusion.
The appeal is accordingly allowed and the judgment
under appeal is set aside and the question is answered in
the affirmative and in favour of the accountable person. The
accountable person is entitled to the costs of this appeal.
S.R. Appeal allowed.
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