1. A trust for a charitable purpose has been created by members of Kale family at Nagpur and the settlors shown in the trust deed dated June 21, 1950 (annex. A to the statement of the case), were : (1) Shri. Purshottam Balkrishna Kale, (2) Smt. Ansuyabai Purushottam Kale (husband and wife), and (3) Shri. Kashinath Purushottam Kale, and (4) Shri. Balakrishna Purushottam Kale, who were the sons of the first two settlors. One of the properties settled on trust is known as 'Kale Bhawan', the value of which was shown in the trust deed at Rs. 2,74,000 and belonged exclusively to settlor No. 1959. The respondent in this reference is the accountable person, being the widow of the deceased, Shri K. P. Kale. It is not necessary to refer in detail to the charitable purposes for which the trust was created because it has not been found as a fact by a Tribunal that the trust is a public trust for be utilised for charities which according to the trust would include 'donations to erect funds for scholarships, prizes, medals, etc.,' establishment of technical schools and colleges and other educational institutions and hostels for students of either sex, medical relief of all kind help to the destitute and poor and aid for people stricken by calamities such as floods, fire, etc., and no distinction was to be made on the basis of caste, creed or religion in respect of beneficiaries who would benefit by the trust. So far as 'Kale Bhawan' is concerned, it appears that the property was transferred to the trust subject to the trust accepting the liability of Rs. 50,000 which was the encumbrance in the form of a mortgage debt on the said property. The settlor were themselves to be the trustee.
2. One of the clause of the trust deed provided that the managing trustee or managing trustees were to be paid '25 per cent, of the trust income an emoluments for him or them for managing the trust property' but at no time the total remuneration of the managing trustee or trusted could be more than Rs. 2,000 per month. Clause 11 of the trust deed provided for the first two settlors, namely, Shri Purushottam Balakrishna Kale and Smt. Ansuyabai Kale, to stay free of rent in one of the trust properties, namely, 'Anand Bhawan'. It would, however, be noted that the trust in respect of this property is not in question in the present proceedings. Smt. Ansuyabai Kale was to be the first trustee for life under cl. 9, or until she resigns or relinquishes her office. Clause 19 further provided that if Shri Purushottam Balkrishna Kale survived, any one of the events putting an end to the managing trusteeship of Mrs. Ansuyabai Kale and if he chose accept the office of the managing trustee, he shall be the second managing trustee for life or until he resigns or relinquishes his office. Them comes cl. 23 on which the Revenue is heavily relying on the applicability of the provisions of s. 12 of the E. D. Act, 1953. It is, therefore, proper to reproduce this clause in full. It reads as follows :
'23. If at any further time, this trust cannot function for any reason whatsoever the trust shall be dissolved and the trust property respectively be returned to the settlors and future contributories to the trust fund or their heirs, representatives administrators or assigns. however, under no circumstances the settlor shall be entitled to revoke the Trust hereby created for a period of ten years from the October 7, 1951.'
3. After the death of Shri. K. P. Kale when the proceedings for determination of the estate duty payable by the accountable person were taken up by the Assistant Controller of Estate Duty, he took the view that there was a reservation of interest by implication in the trust deed and, as such s. 12(1) of the E.D. Act was applicable to the facts of the case. The Assistant Controller also took the view that here was a mortgage loan of Rs. 50,003 on Kale Bhawan which was transferred to the trust and the trust having accepted that liability, the deceased was benefited to that extent. The market value of Kale Bhavan was determined at Rs. 4,00,000 and deducting the amount of Rs. 50,000 which was as a mortgage-encumbrance, the Asst. Controller added a sum of Rs. 3,50,000 as a part of the dutiable estate of the deceased. We are not concerned with the other assets which consisted mainly in the form of goodwill in certain firms.
4. The Zonal Appellate Controller took the view that on the terms of the trust deed it could not be said that the settlor had reserved any benefit from the estate. It may be mentioned that s. 12 of the E.D. Act, was invoked by the Assistant Controller on the ground that the trust was advancing monies out of trusts funds to the Provincial Automobile Company Limited, Nagpur, in which the deceased partner was holding 8 annas share. During the lifetime of the deceased one of the trust properties was sold and the sale proceeds were advanced as loans to the wife of the deceased and the trust funds have been invested in various firms in which the deceased was the partner. He had also taken the view that under cl. 10 of the trust deed, the children of the settlors as well as descendants were also entitled to receive educational scholarships or medical held and marriage bounties and, therefore, the Explanation to s. 12(1) of the E.D. Act was applicable. All the reasons given by the Asst. Controller for holding that the deceased had reversed interest in the trust properties were held by the Appellate Controller to be not justified. He, therefore, deleted the value of the trust property amounting to Rs. 3,50,000 from the value of the dutiable estate of the deceased.
5. The Department then preferred an appeal before the Tribunal. the Tribunal found that in dispute did not pass on the death of the deceased and that there was no scope for applying the provisions of s. 12 as there was no interest created or reserved in favour of the deceased by the trust deed. One of the circumstances considered by the Tribunal while dealing with cl. 23 of the trust deed, which according to the Department, had the effect of reserving the power of revocation by the settlor was that the trustee had approached the Asst. Charity Commissioner for treating the trust as dissolved, but the Asst. Charity Commissioner by his order dated April 21, 1962, had held that the trust was neither dissolved nor extinct nor revoked. The findings of the Asst. Charity Commissioner was thus treated as final. The Tribunal, therefore, upheld the order of the Appellate Controller. Arising out of this order of the Tribunal the following there question have been referred to this court under s. 64(1) of the E.D. Act, 1953 :
'1. Whether, on the facts and the circumstances of the case, the Tribunal was justified on the constructions of the trust deed dated June, 30,1950, that it did not create any interest in the property for life or any other period determinable by reference to the settlor's death or that no right has been reserved to the settlor by the exercise of which it was possible for him to restore to himself or to reclaim absolute interest in the property, namely,, 'Kale Bhawan' ?
2. Whether, on the facts and circumstances of the case, the finding given by the Assistant Charity Commissioner that it was an irrevocable trust was binding on the authorities under the E.D. Act and also the Tribunal ?
3. Whether, on the facts and circumstances of the case, the value of Kale Bhawan was includible in the dutiable estate under section 12 ?'
6. The relevant part of s. 12 of the E.D. Act, 1953, on which Shri Joshi, the learned counsel for the Department, was relying, reads as follows :
'Property passing under any settlement made by the deceased by deed or any other instrument not taking effect as a will whereby an interest in such property for life or any other period determinable by reference to death is reserved either expressly or by implication to the settlor or whereby the settlor may have reserved to himself the right by the exercise of any power, to restore to himself or to reclaim the absolute interest in such property shall be deemed to pass on the settlor's death....'
7. The rest of the provisions of s. 12 are not relevant for our purpose. Section 12(1) is in the two parts : the first part deals with the reservation interest in the trust property for life or any other period determinable by reference to death, whether expressly or by implication; and the second part deals with reservation by the settlor by the right to revoke the trust, with the ultimate result of restoring to the settlor the trust property or enabling him to reclaim the absolute interest in such properties. In any one of these contingencies such property, though a trust may have been created in respect thereof has been provided to deem to pass on the death of the settlor.
8. The first question referred is a composite question turning on the applicability of the two contingencies referred to in s. 12(1). We shall first deal with the arguments advanced by the learned counsel for the Revenue that cls. 6 and 19 of the trust deed has the effect of reserving the kind of interest contemplated by s. 12(1) and, therefore, according to the learned counsel Kale Bhawan property must be deemed to have been passed on the death of the deceased. Clause 6 refers to the remuneration payable to the managing trustee which, as already pointed out, was to be 25 per cent. of the trust income subject to a maximum of Rs. 2,000 per month. Now, the managing trustee, under the terms of the trust deed, was initially to be Mrs. Anusayabai Kale till her lifetime and thereafter, if Mr. Kale chose to accept the officer of the managing trustee, then he was to so act as the managing trustee further for his lifetime. Under cl. 19, after the death of Mr. Purushottam Balkrishna Kale, there were to be two managing trustees and there is no doubt that the deceased and his brother, Balkrishna Purushottam Kale, were to be the managing trustees, who were also to hold officer for life or till one or both of them resigned or relinquished his or their office and appointed his or their successors. Now, unless we go as far as to hold that he will be the managing trustee for which he will receive certain amount of remuneration out of the trust fund, such a provision by itself would amount to reservation of interest as contemplated by s. 12(1), will be difficult to accept the submission advanced by Shri. Joshi. where a settlor creates a trust, it lief within his power to also make a provision as to the management of the trust property. It is perfectly permissible for a settlor to nominate any person as trustees or first trustees and where there were more than one trustee, a managing trustee. It is also within his power to regulate the appointment of trustees in future as well as the managing trustee. There is no prohibition in law if the settlor himself takes over the function of the managing trustees after the trust has come into being. When the settlor himself becomes a trustee or managing trustee a change undergoes in his capacity from one of an owner of property to that of trustees holding the trust property for the benefit of the beneficiaries or for the purpose of working out the directions in the deed of trust. If for such work, any remuneration is provided for by the terms of the trust deed, that would not, in our view, amount to the reservation of any interest for the purposes of s. 12(1). Though no authority for this proposition is really needed, we may refer to the decision of this court in CED v. Sultan Alam Khan : 116ITR360(Bom) , to which one of us was a party. In that case, we were dealing with a wakf, one of the clauses of which was that the settlor, who was himself the trustee, was permitted to occupy one of the flats in the trust property in order to manage the trust properties and it was held that a provision permitting occupation of the trustee property did not amount to a reservation of any interest in the property settled by the settlors. The Department was, therefore, not entitled to rely on cls. 6 and 19 to contend that here was reservation of interest of the trust property and, therefore, the value of Kale Bhawan was liable to be treated as a part of the dutiable estate.
9. Second limb of the argument of the learned counsel for the Department is based on cl. 23. Clause 23, which we have reproduced above, expressly reserve the power to the settlors to dissolve the trust. This power is conditional by two conditions : firstly, there is absolute prohibition against revocation of the trust for a period of 10 years from October 7, 1951. The second restriction on the power of revocation is that the power of revocation can exercised only if 'this trust cannot function for any reason whatsoever.' What is contended by Shri Joshi is that notwithstanding the fact that the power to revoke the trust is controlled by the recitals in cl. 23 and it can be exercised only after a period of 10 years and further only if thereafter if it is seen that the trust cannot function for any reason, the power if essentially one of revocation and this according to the learned counsel is enough for the purposes of the applicability of the provisions of s. 12(1). What is contended by Shri Manohar on behalf of the accountable person is that apart from the fact that the power is circumscribed by conditions and there is no absolute power reserved t the settlors to revoke the trust, in this particular case when the settlors wanted to revoke the trust, their efforts to do so too have proved to be futile because, according to the learned counsel, they had approached the Asst. Charity Commissioner appointed under the provisions of the Bombay Public Trusts Act, 1950, after the trustees had passed a resolution revoking the trust in terms of cl. 23 of the trust deed. The order of the Asst. Charity Commissioner is dated April 21, 1962, which clearly after the death of the deceased whose estate is now being brought to tax. The resolution itself is dated December 20, 1961, which is also after the death of the deceased. The order of the Asst. Charity commissioner is annex. G to the statement of case. The Asst. Charity commissioner referred to the several provisions of the Bombay Public Trust Act and took the view that the public trust is created for the purposes of education, relief of poor and distressed and for other objects of general public utility. He took the view that the power of revocation in the trust deed is not unconditional and, therefore, the mere wish of the trustees to dissolve the public trust cannot dissolve it when the trust properties could be applied to the objects set out in the trust deed. Now, as already pointed out, there can hardly be any doubt that cl. 23 of the trust deed is a repository of the express power of revocation which could be exercised after the period of 10 years from the date specified therein and if the trust cannot function for any reason. If the mere reservation in the case of a public trust was sufficient to bring the case within the latter part of s. 12(1) of the E.D. Act, the Revenue would be entitled to succeed if the decision is to be given only on a reading of the document of trust. It appears to us, however, that the reference cannot be decided merely on the footing that the deed of trust contains a clause reserving the power of revocation to the trustees by the settlors, who were themselves the trustees. We are dealing with a public trust and unless we are satisfied that public trust can be validly put to an end to or that it lies within the power of the settlors to retrace their steps leading to the creation of the public trust with or without the power of revocation, it will be difficult for us to hold that merely because in the case of public trust a power to revoke is reserved by the settlor, such property must be deemed to pass on the death of the settlor for the purposes of s. 12(1) of the E.D. Act. When s. 12(1) refers to the reservation by the settlor of the right to exercise the power of revocation, it obviously presupposes that such a power of revocation can be validly and legally reserved by the settlor. In other words, even if the documents of trust does contain a clause expressly the power of revocation if in law such a power of revocation is impossible to be either reserved or exercised, in our view, the Department would not be entitled to rely on the latter part of s. 12(1) merely because in the settlement the settlors purported to reserve the power to revocation.
10. It becomes, therefore, necessary to ascertain whether in the case of a public trust it is permissible in law for the settlor to revoke the public trust. In this context, Shri Joshi had relied on the provisions of ss. 77 and 78 of the Indian Trusts Act. Section 77 provides for how the trust is extinguished and one of the cases in which a trust is stated to be extinguished is where the trust being revocable is expressly revoked. Section 77 reads as follows :
'77. Trust how extinguished-A trust is extinguished -
(a) when its purpose is completely fulfilled; or
(b) when its purpose becomes unlawful; or
(c) when the fulfilment of its purpose become impossible by destruction of the trust property or otherwise; or
(d) when the trust being revocable, is expressly revoked.'
11. Clause (d) of s. 77 has to be read with s. 78 which expressly deals with revocation of trust and it reads as follows :
'78. Revocation of trust-A trust crated by will may be revoked at the pleasure of the testator. A trust otherwise created can be revoked only :
(a) where all the beneficiaries are competent to contract-by their consent;
(b) where the trust has been declared by a non-testamentary instrument or by word of month-in exercise of a power of revocation expressly reserved to author of the trust; or
(c) where the trust is for the payment of the debts of the author of the trust, has not be communicated to the creditors-at the pleasure of the author of the trust.'
12. Shri Joshi had relied on the provisions of cl. (b) of s. 78. According to the learned counsel, the trust in question is declared by a non-testamentary instrument, which is not disputed, and the learned counsel then contends that there is power of revocation reserved by the author of the trust and the instant case, therefore, is one in which revocation can be brought about and, therefore, s. 12(1) will apply.
13. Now, a reference to the provisions of ss. 77 and 78 of the Indian Trusts Act, 1882, seems to us to be wholly out of place. the Trusts Act, 1882, does not apply in the case of religious or a charitable trust. Section 1 of the Trusts Act is in two parts. The first part gives the title of the commencement of the Act. the second part deals with the legal extent and savings provision. The material portion of s. 1 reads as follows :
'This Act may be called the Indian Trusts Act, 1882 and it shall come into force on the first day of March, 1882.
It extends to the whole of India....
But nothing herein affects the rules of Muhammadan law as to Wakf, or the mutual relations of the members of an undivided family as determined by any customary or personal law, or applied to public or private religious or charitable endowments, or to trusts to distribute prizes taken in war among the captors; and nothing in the second chapter of this Act applies to trusts created before the said day.'
14. The portion underlined by us above would clearly indicate that the applicability of the Trusts Act is expressly excluded in the case of public or private religious or charitable endowments.
15. At one stage, Shri Joshi wanted to contend that when s. 1 refers to religious or charitable endowments, only trusts made in favour of deities and the properties dedicated to dilates were contemplated by s. 1. That, however, does not appear to be the correct position. Endowment is a word of wide import and according to the Chamber's Twentieth Century Dictionary, the word 'endowment' means 'that which is settled on any person or institution'. In Black's Law Dictionary, 5th Edn., the meaning of the word 'endowment' has been given as 'the act of settling a fund, or permanent pecuniary provision for the maintenance of public institution, charity, college, etc.' Therefore, any charitable trust which is either of a public or a private character would be wholly outside the provisions of the Trust Act. the provisions of the Trusts Act will, therefore, not be of much held so far as the power of revocation in the case of s. 1 there is also a decision of the Madras High Court in Krishnaswamy Pillai v. Kothandarama Naicken : (1914)27MLJ582 , where a Division Bench of the Madras High Court has observed that : 'Under the Trusts Act (2 of 1882), which applied in terms only to private trusts, it is not open to a settlor to revoke a completed settlement.' Therefore, so far as the revocation of a public trust is concerned, the power cannot be found in the provisions of the Trusts Act.
16. The only question which, therefore, falls for consideration is whether after the dedication of the trust property to charitable uses is made, the trust can validly be revoked and whether the power to revoke the trust can be validly exercised by the settlor in terms of the reservation. It cannot be disputed that once a trust for a charitable purpose is created in a given case, the trust fund can grow and grow to a size much larger than what was endowed originally by the settlement in the given case. Donations may be given to the trust or immovable property may be gifted to the trust by person who want their property to be utilised for the same purposes for which the trust is created. Whether trust is in favour of an idol and is of a religious nature or whether the trust is intended to achieve charitable purposes would in that context be wholly irrelevant. The real question is whether in such a case, it would be permissible for a settlor to revoke the trust so as to undo the trust itself and thus affect not only the trust property settled by him but certain other dedicated to that charity. There is no express provision of law permitting this to be done. On first principles, permitting such a power to be exercised by the settlor would open the floodgates of a device which would enable people to use the creation of the trust as a means for getting back larger property than what was originally settled as trust property. In Halsbury's Laws of England, 4th Edn., Vol. 5, while dealing with relation of charitable trusts in para. 624, it has been observed as follows :
'Charitable trusts have sometimes been declared subject to express powers of revocation, but there has apparently been no decision on the validity of such a power except as regards the rule against perpetuities.'
17. In Hindu Law of Religious and Charitable Trusts by Justice B. K. Mukherjea, as he then was, it has been observed as follows in 4th Edn., on p. 109 :
'Of course, if a valid dedication is once complete, there would be no power left in the donor to revoke it and no assertion on his part, or the subsequent conduct of himself and his descendants contrary to such dedication would have the effect of nullifying it.'
18. These observations are made on the authority of the decision of the Allahabad High Court in Dasami Sahu v. Param Shameshwar : AIR1929All315 , where a Division Bench consisting of Sulaiman and Kendall JJ. at p. 317, has observed :
'The question whether it created a valid dedication depends on whether there was a real intention to dedicate the property and the dedication was completed. No doubt there may be circumstances under which the mere execution and registration of a deed of endowment may not amount to a complete dedication and the proceedings may be merely a nominal one. On the other hand it is also clear that if a valid dedication has once been completed there would be no power left in the donor to revoke it, and no assertion on his part or subsequent conduct contrary to such dedication would have the effect of nullifying it.
19. The learned author (B. K. Mukherjea J.) while deciding a case as a judge of the Calcutta High Court in Radhika Mohan Nandy v. Amrita Lal Nandy : AIR1947Cal301 , has made the following observations in para. 6 :
'A dedication of property to a deity is irrevocable, and the rules, if any, laid down by the founder at the time of dedication regulating succession to the office of the shebait should be deemed to be irrevocable also unless the power of revocation is reserved by the grantor.'
20. That decision no doubt arose out of a dispute relating to the office of shebait but the first part of the observation that the dedication of the property to the deity is irrevocable clearly indicates that a dedications of property to a charity must be treated as always irrevocable. On principles there is no difference between a dedication to a deity or dedication to any other form of charity or charitable purpose. There are certain observations of the Supreme Court in Ramkishorlal v. Kamalnarayan : AIR1963SC890 , the support the view which we were inclined to take. in that case a village was dedicated absolutely to a public temple of Shri Ramchandra Swamy within the Dudhadhari Math in Raipur, MP. the controversy was whether by the award embodying the partition that took place between the members of a joint Hindu family an absolute dedication of the village was made in favour of the temple or whether the village was given in full proprietorship to one of the members with only a charge on it to meet the expenses of the temple. After holding on a construction of the award that the village as dedicated absolutely to the temple and the concerned member of the family was given possession of it as manager and trustee of the temple, the Supreme Court observed (p. 896) :
'Once an absolute dedication of the property had been made in favour of Shri Ramachandra Swamy temple the former owners of the property had no legal authority to go behind that dedication.'
21. These observations thus indicated that even according to the Supreme Court, once there is a dedication of property to charity, that dedication cannot be undone by the original settlors. Tudor in his Treatise on Charities (5th Edn., p. 83) has observed as follows :
'In cases not covered by the Mort. and Char. Uses Act, 1888, or the repealed Act of Geo. 2, and subject to the rule against perpetuities, a charitable limitation may be subject to a power of revocation, but there can be no revocation after a valid dedication to charitable uses. (See Re Shum's Trust  91 Law Times 192.)'
22. This passage is cited with approval by a Division Bench of Madras High Court in Krishnaswamy Pillai's case AIR 1915 MAD 380. In the late edition, the learned author has, at p. 127, observed as follows :
'... when a charity has once been formed and endowed the founder cannot by any act of his alter the endowment.'
23. There is thus unanimity in the view that in the case of charitable endowment or trust once the dedication is completed there is no power of revocation left with the settlors. Even though in a given case the settlor has reserved the power to revoke the trust, in our view, such a reservation would be wholly invalid and the power cannot be invoked so as to under the settlement.
24. As a matter of fact, the view taken by us is sufficient to dispose of this reference in favour of the accountable person. We may, however, in addition, point out that so far as the State of Maharashtra is concerned, the public trusts are subject to the control and supervision of the Charity Commissioner who has to function according to the provisions of the Bombay Public Trusts Act. it is not in dispute that the trust in question has been registered not only under the provision of the Bombay Public Trusts Act but that it was registered even under the M.P. Public Trusts Act, 1951, which was the relevant Act in force in the Vidarbha Region prior to the applicability of the Bombay Public Trusts Act. Apart from the fact that none of the purposes for which the trust has been created by the settlor in this case can stand exhausted, even in a case where the original object of the public trusts has failed, there is power in the Charity Commissioner under s. 55 of the Bombay Public Trusts Act to 'require the trustees to apply within the prescribed time for directions to the court within the local limits of whose jurisdiction the whole or part of the subject-matter of the trust is situate.' It is obligatory that the trustees should comply with the requisition. there is power in the court under s. 56 of the Act to give appropriate directions, so far as it may be expedient, practicable, desirable, necessary or proper in public interest, to give effect to the original intention of the author of the public trust or the object for which the public trust was created. If the court is of opinion that the carrying our of such intention or object is not wholly or partially expedient, practicable, desirable, necessary or proper in public trusts or any portion thereof to be applied cy-pres to any other charitable to religious object.' There is also power in the Charity commissioner to remove and appoint fresh trustees and see that the intention of the settlor is given effect to. Therefore, apart from the general principles that in the case of a public trust, where dedication is complete, a power of revocation does not be any ground which could fall within cl. 23 and indeed the provision in cl. 23 could be wholly irrelevant because there are overriding provisions of the Bombay Public Trusts Act under which if a public trusts is not being given effect to, the Charity Commissioner can step in and see that the trust funds were applied to a charitable purpose. It is, therefore, clear that the so-called power of revocation is wholly redundant and ineffective. If the power of revocation was redundant and ineffective and indeed wholly invalid the mere reservation of a power by a clause in the trust deed could not attract the applicability of he provisions of s. 12(1) of the Act. It is therefore, wholly unnecessary for us to decide whether the Department was entitled to challenge the correctness of the order of the Asst. Charity commissioner by which he declined to give effect to the resolution passed by the trustees, the controversy relating to which has been made the subject-matter of question No. 2. In the view we have taken, we answer the questions referred to the court as follows :
Question No. 1 :- In the affirmative and against the Revenue.
Question No. 2 :- Need not be answered.
Question No. 3 :- In the negative and against the Revenue.
25. Revenue to pay the costs of this reference.