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Kokilambal & Ors vs N.Raman on 21 April, 2005

Supreme Court of India
Kokilambal & Ors vs N.Raman on 21 April, 2005
Author: A Mathur
Bench: Ashok Bhan, A.K. Mathur
           CASE NO.:
Appeal (civil)  6994 of 1999

PETITIONER:
Kokilambal & Ors.

RESPONDENT:
N.Raman

DATE OF JUDGMENT: 21/04/2005

BENCH:
ASHOK  BHAN & A.K. MATHUR

JUDGMENT:

J U D G M E N T

A.K. MATHUR, J.

This appeal is directed against an order passed by
learned Single Judge of the High Court of Madras in Second Appeal
No.1866 of 1986 on November 19,1998 whereby learned Single
Judge affirmed the judgment and order of the First Appellate Court
and dismissed the second appeal filed by the appellant herein.

Brief facts giving rise to this appeal are as follows. The
plaintiff- respondent instituted Original Suit No.8182 of 1980 before
the XVIth Assistant Judge, City Civil Court, Chennai praying for seven
reliefs. The main reliefs prayed for in the suit read as under :

” (i) Declaring that the plaintiff is entitled to
the properties in plaint A & B Schedule
absolutely after the life time of the lst defendant;

(ii) For a declaration that the deeds of revocation
dated 27.3.1979 registered as document
Nos.431 and 432 of 1979 in the office of the
Sub-Registrar, Madras in respect of properties
described in Schedule A and B hereunder are
void in law and not valid and binding on the
plaintiff;

(iii) For a declaration that the deeds of settlement
dated 30.3.1979 executed by the lst defendant
in favour of defendants 2 and 3 in respect of
plaint A and B schedule properties are void in
law and are not valid and binding on the plaintiff;

(iv) For a declaration that the deed of mortgage
dated 29.9.1979 executed by defendants 1 to 3
in favour of 4th defendant in respect of the plaint
A and B Schedule properties are not valid and
binding on the plaintiff;

(v) Directing the defendant to render true and
correct account of the rental income from the
properties described in the Schedule A and B
and to pay over the half share payable to the
plaintiff;”

According to the plaintiff in the suit, schedule properties A & B
belonged to one Late Manicka Mudaliyar, the husband of the first
defendant. That the said Manicka Mudaliyar died in or about 1963
leaving behind Kokilambal, the first defendant as his sole legal heir.
Since the deceased Manicka Mudaliyar had no issue, he showered
his love and affection to his elder sister’s son Varadan and had a
mind to adopt him but before he could do so, he expired. Keeping in
view the wishes of her deceased husband, Kokilambal got all the last
rites performed through Varadan. Kokilambal, the wife of deceased
Manicka Mudaliyar made settlement on June 12, 1963 of A schedule
property in favour of Varadan while reserving her right and interest
therein. Similarly, she also made a settlement on June 27, 1964 in
respect of B schedule property and executed a deed of settlement in
favour of Varadan. By virtue of these two settlement deeds, settler
Kokilambal stipulated certain terms and conditions (reference shall
be made hereinafter). Varadan who was a bachelor executed a will
on May 22, 1978 in respect of his other properties other than those
properties which were received by him from Kokilambal by way of
settlement in favour of his brother( Plaintiff) . But Varadan died as a
bachelor on February 1, 1979. On March 27, 1979 the settlor,
Kokilambal revoked both the settlement deeds in favour of Varadan
and she executed a fresh settlement deed in favour of one Babu @
Pilani and Shantha @ Shanthi, the wife of Babu. Shanti was the
daughter of Kokilambal’s brother. Thereafter, Varadan’s brother,
N.Raman filed a suit to declare that he is entitled to the suit
properties after the death of Varadan and sought a declaration that
the revocation of settlement deed made by Kokilambal on March 27,
1979 be declared as null and void and likewise the fresh deed of
settlement executed by Kokilambal on March 30,1979 in favour of
Defendant Nos.2 & 3 i.e. Babu and Shanthi be declared void in law.
The suit was dismissed by the trial court. The plaintiff preferred an
appeal before the first appellate court which decreed the same.
Against that an appeal was preferred by the appellant and the same
was also dismissed by the impugned judgment of the High Court in
second appeal on November 19,1998. Aggrieved against this order
dated November 19,1998, special leave petition was filed and on
grant of special leave this appeal has come up for disposal before us.

The basic question which calls for consideration is what is the
effect of the earlier two settlements made by settlor Kokilambal in
favour of deceased Varadan; and whether by virtue of that settlement
deceased Varadan became the absolute owner and after his death
whether Kokilambal reserved her right to revoke the settlement or
not ? In order to appreciate the contents of the settlement of the suit
schedule properties i.e. A & B it would be necessary to reproduce
the recitals in the settlement deeds (A-1 & A-2) which read as under :

” Since we did not beget issues, even during
my husband’s life time he brought up Varadan,
the younger son of his elder sister viz.,
Kuppammal, as his own son. He ( my husband)
suddenly passed away. Even during his life time
he has decided to take Varadan as an adopted
son. I have also decided to act according to his
wishes and hence, I performed the last rites of
my deceased husband through Varadan. Due to
the love and affection that I have towards
Varadan, I intend to make an arrangement for
him, and hence I executed and delivered this
Deed of Settlement.

This income derived from out of the under-

mentioned Schedule property viz., Door No.43,
Kakkaran Basin Road, shall be enjoyed by
myself and Varadan, till my life time. After my
demise, the house, more fully described in the
schedule, shall be enjoyed by Varadan
absolutely.

From now on, the aforesaid Varadan himself,
shall collect the rental income of the aforesaid
house and pay the corporation and land tax,
repairs etc., and the reminder rental amount
shall be enjoyed by me and Varadan in moiety.
Hereafter, I have no right to alienate the
property. But, both of us have right to alienate
the same jointly.”

Learned Single Judge of the High Court of Madras came to the
finding after review of various decisions of this Court as well as the
said High Court, that by instruments of settlement i.e. A-1 & A-2, a
vested right was created in favour of deceased, Varadan and since
vesting has taken place in favour of Varadan, the settlor cannot
subsequently revoke that settlement and execute a fresh settlement
in respect of the suit schedule property in favour of Babu & Shantha.
Learned Single Judge affirmed the finding of the trial court that the
order of revocation of the settlement was bad and likewise the
execution of a fresh settlement in favour of the appellant Nos.2 & 3
was also consequently bad.

Learned counsel for the appellant has submitted that both the
courts below have not correctly approached the matter because the
settlement deed does not create a vested right in favour of Varadan
so long as Kokilambal was alive and as per the terms of the
settlement the vesting of the suit schedule property i.e. A & B would
only arise after the death of Kokilambal. Therefore, there is total mis-
reading on the part of both the courts of the contents of the
settlement deeds. As against this, learned counsel for the respondent
submitted that by virtue of the aforesaid settlement, a vested right
was created in favour of the deceased settlor, Varadan and therefore,
by way of succession the suit property should come to his brother
plaintiff and the settlor Kokilambal cannot revoke the settlement
deeds and issue a fresh settlement in favour of appellant Nos.2 & 3.

Settlement is one of the recognized modes of transfer of
moveable and immovable properties under Hindu law. The Courts
have accepted such mode as legal and valid mode of transfer of
properties. Courts have emphasized that in order to find out the
correct intent of the settlor the settlement deed has to be read as a
whole and draw their inference of its content. Therefore, it has
always been emphasized that the terms of the settlement should be
closely examined and the intention of the settlor should be given
effect to. Sometimes there is absolute vesting and sometimes there
is contingent vesting as contemplated in Sections 19 and 21 of the
Transfer of Property Act, 1882. In order to ascertain the true intention
of the settlor one has to closely scrutinize the settlement deed,
whether the intention of the settlor was to divest the property in his
life time or to divest the property contingently on the happening of
certain event. In this connection, reference may be made to a
decision of this Court in the case of Rajesh Kanta Roy vs. Santi Debi
reported in [1957] SCR 77. Their Lordships observed that the
determination of the question as to whether an interest created is
vested or contingent has to be guided generally by the principles
recognized under Sections 19 and 21 of the Transfer of Property Act,
1882 and Sections 119 and 120 of the Indian Succession Act, 1925.
Their Lordships quoted a passage from Jarman on Wills ( 8th Ed. ,
Vol II at page 1390 which states as follows :

” So, where a testator clearly expressed his
intention that the benefits given by his will
should not vest till his debts were paid, *** the
intention was carried into execution, and the
vesting as well as payment was held to be
postponed.”

Their Lordships in the case of Rajesh Kanta Roy (Supra) have
observed as follows:

” 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.”

Their Lordships have clearly observed that in order to decide the
issue one has to closely go through the terms of settlement and the
intention of the settlor.

In this connection, our attention was invited to a decision of this
Court in the case of Usha Subarao vs. B.N.Vishveswaraiah & Ors.
reported in (1996) 5 SCC 201 wherein it was observed as follows:

” An interest is said to be a vested
interest when there is immediate right of present
enjoyment or a present right for future
enjoyment. An interest is said to be contingent if
the right of enjoyment is made dependent upon
some event or condition which may or may not
happen. On the happening of the event or
condition a contingent interest becomes a
vested interest.”

Their Lordships also relied upon an observation made in Halsbury’s
Laws of England, 4th Edn., Vol. 50, paras 591, 592 which read as
under :

” 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. As
regards Wills the rule is that ” where there is a
doubt as to the time of vesting, the presumption
is in favour of the early vesting of the gift and,
accordingly, it vests at the testator’s death or at
the earliest moment after that date which is
possible in the context.”

Their Lordships also relied upon Halsbury’s Laws of England, 4th
Edn., Vol.50, Para 589 at page 395 which reads as under :

” It is necessary to construe the Will to find out
the intention of the testator. With regard to
construction of Wills the law is well settled that
intention has to be ascertained from the words
used keeping in view the surrounding
circumstances, the position of the testator, his
family relationship and that the Will must be read
as a whole”

Our attention was also invited to a decision of this Court in the case
of Namburi Basava Subrahmanyam vs. Alapati Hymavathi & Ors.
reported in (1996) 9 SCC 388. In this case also the question was
whether the document is a will or settlement. Their Lordships held
that the nomenclature of the document is not conclusive one. It was
observed as follows:

” The nomenclature of the document is not
conclusive. The recitals in the document as a
whole and the intention of the executant and
acknowledgment thereof by the parties are
conclusive. 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 under the
document, or whether the executant intended to
transfer the interest in the property only on the
demise of the settlor. Those could be gathered
from the recitals in the document as a whole.

The document in this case described as
‘settlement deed’ was to take effect on the date
on which it was executed. The settlor created
rights thereunder intended to take effect from
that date, the extent of the lands mentioned in
the Schedule with the boundaries mentioned
there under. 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 in
praesenti 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 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. Thus the document in question could be
construed rightly as a settlement deed but not a
s a Will. The settlor, having divested herself of
the right and title there under, had, thereafter, no
right to bequeath the same property in favour of
her first daughter. ”

In this background, we have to examine the settlement deeds created
by Kokilambal in favour of the deceased Varadan. The recitals of the
settlement deeds i.e. A-1 and A-2 as reproduced above, clearly
says that since Kokilambal had no son and her husband Konicka
Mudaliyar during his life time has bestowed his love and affection on
Varadan, the son of his elder sister, and therefore, out of love and
affection, she has settled that the income derived from the properties
i.e. Door No.43, Kakkaran Basin Road, shall be enjoyed by herself
and Varadan, till her life time and after her demise, it shall be enjoyed
by Varadan absolutely. She further authorised him to collect the
rental income of the aforesaid house and pay the corporation and
land tax, repairs etc. and the remainder rental amount shall be
enjoyed by herself and Varadan in moiety. The appellant No.1 further
settled that she would not alienate the property but both of them
reserve the right to alienate the property jointly. Therefore, this
settlement in no uncertain terms lays down that the properties in
question will vest absolutely after the death of the appellant No.1 and
during their life time, both will enjoy the usufructs but Varadan would
collect the rental income of the aforesaid property. It is further
mentioned that both will have the right to alienate the property in
question jointly. These conditions are very clear , Varadan would
have acquired the absolute right over the property after the death of
Kokilambal. Even during their life time if the property was to be
alienated then the same would be alienated by them jointly meaning
thereby that the appellant No.1 continued to hold the property during
her life time and both of them were permitted to enjoy the usufructs of
that property. These settlement deeds in our opinion, clearly make
out that Varadan was not made absolute owner of the property during
the life time of the settlor, Kokilambal.

Learned counsel for the respondent has tried to interpret this
document that since the appellant No.1 had already divested her right
to alienate the property that should be enough to show that the entire
property stood vested in favour of Varadan. Learned counsel for the
respondent tried to seek support from a decision in the case of
Turlapaty Rajeswara Rao & Anr. vs. Kamarajugadda Rangamma &
Ors. reported in [1949] 1 MLJ 480 ( Vol.96) In that case also it was
observed that the wife got the life estate in the properties and the
nephews got the vested interest in the same although they are
postponed till her death. In this case also it was held that the
fundamental rule of construction of a will is that the intention of the
testator should be gathered from a reading of the will as a whole.
Learned counsel for the respondent also invited our attention to a
decision in the case of P.Ram Mohan vs. Lalitha Raghuraman & Ors.
reported in AIR 1976 Madras 333. In that case, on the facts Their
Lordships came to the conclusion that where a settlor by a deed of
settlement created a life interest in favour of himself, his wife, his
foster son, it was held that the two sons of the settlor acquired a
vested interest in the property on the date of execution of the deed.
Therefore, this depended on the construction of the settlement
deed. But in the present case, we have quoted above the recitals in
the settlement deeds i.e. A-1 and A-2 and have also interpreted the
same that the settlor Kokilambal had not completely divested her right
in favour of the deceased Varadan but it was a contingent one that it
would vest after her death. Therefore, the intention of the settlor was
very clear that the settlement was to come into effect after the death
of settlor, Kokilambal.

There is an additional factor for coming to this conclusion.
Vardan who was a bachelor and had certain property inherited from
his real parents, he executed a will in favour of his brother, the
plaintiff. But he did not include this property, that shows that at the
relevant time it was also clear that the property which would come to
him by way of settlement had not come to be vested in him and
therefore, that property was not included in his will when he made the
same with regard to the property which was received by him from his
father or from his ancestors. Therefore, from this we have no
hesitation in our mind to hold that the view taken by the leaned
Single Judge of the High Court of Madras as well as by the first
appellate Court was not correct and it was totally misreading of the
deed of settlement.

Since Kokilambal survived after Vardan, she revoked the
settlement deeds and issued a fresh settlement in favour of Appellant
Nos.2 & 3. On account of the death of Varadan Kokilambal who was
the settlor remained the sole owner of the suit property because
settlement deed had come to an end on account of the death of
settlee, Varadan. Therefore, she had the right to execute fresh deed
of settlement in favour of appellant Nos.2 & 3. Thus, we do not find
that subsequent settlement made by the appellant No.1 in favour of
Appellant Nos.2 & 3 suffers from any illegality.

Hence, as a result of our above discussion, we allow this
appeal and set aside the impugned order dated November 19, 1998
passed by learned Single Judge of the High Court of Madras in
Second Appeal No.1866 of 1986 as well as the order of the first
appellate court whereby the order of the trial court dismissing the suit
was reversed. There would be no order as to costs.

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