1. This is a case stated by the Appellate Tribunal under Section 64(1) of the Estate Duty Act, 1953 referring for our answer the following questions of law:
'(1) Whether on the facts and in the circumstances of the case, the Muafi grant held by the deceased Sardar Narayan Rao Patankar was property within the meaning of Section 2(15) of the Act?
(2) Whether on the facts and in the circumstances of the case, the Muafi grant was held by the deceased Narayan Rao Patankar for his life only?
(3) Whether on the facts and in the circumstances of the case, the Muafi grant held by the deceased Narayan Rao Patankar passed on his death within the meaning of Section 5(1)?'
2. Sardar Narayan Rao Patankar, who died on 13th October, 1957, was holder of a cash Muafi of Rs. 38,844/- per annum from the Gwalior Darbar. On his death the grant of Muafi was continued by the Madhya Pradesh Government in favour of his son Trimbak Rao Alias Aditya Patankar and the name of the son under the guardianship of his mother Smt. Usha Devi Patankar was substituted in place of the deceased. Smt. Usha Devi Patankar is the accountable person in this case.
3. In assessment proceedings of the Estate Duty on the property passing on the death of Narayan Rao, it was claimed by the accountable person that Muafi was not a property which passed on the death of the deceased and as such the property was not liable to Estate Duty under Section 5 of the Act. This contention was overruled by the Assistant Controller of Estate Duty who valued the Muafi at Rs. 7,76,880/-. In an appeal preferred by the accountable person, the Appellate Controller of Estate Duty held that the Muafi grant was hereditary grant and that it was liable to Estate Duty He, however, reduced the valuation fixed by the Assistant Controller of Estate Duty and fixed the same at Rs. 4 lacs. The accountable person then preferred an appeal before the Tribunal. The Tribunal allowed the appeal. It held that the cash Muafi was not heritable, that it was in the nature of a cash jagir operative for the life time of the holder, though usually continued in favour of the successor, and that the Muafi held by Narayan Rao did not pass on his death within the meaning of Section 5(1) of the Act and was not lible to Estate Duty. On an application made by the Controller of Estate Duty, the Tribunal has referred to us the questions of law that we have already set out.
4. The original Sanad of this grant is not traceable. From the History Jagirdaran, which appears to be a publication under the authority of the Government of the erstwhile Gwalior State, and a translation of which has been included as a part of the statement of the case, it appears that the ancestor of the Patankar family, Shri Rao Saheb Mansingh was a Sardar of Kolhapur and Hyderabad States, His son Ramchandra Rao was married to the daughter of Maharaja Daulatrao Shinde of Gwalior. At the time of the marriage, there was an agreement for payment of some cash and grant of jagir. Thereafter, Maharaja Daulatrao granted to Mansingh Rao 'Mahal Pavagan' in jagir; subsequently the jagir was taken back and cash money used to be paid to him by way of maintenance. Shri Ramchandra Rao used to live with his mother-in-law Smt. Bayjabai, who was the mother of Maharaja Jiwaji Rao Scindia. After the death of Ramchandra Rao, Trimbak Rao Patankar succeeded to him as an adopted son. A grant made to him by Maharaja Jiwaji Rao is on the record. It recites that a sum of Rs. 10,000/- per month was paid in the past by Smt. Bayjabai for maintenance and now Trimbak Rao will get a sum of Rs. 5,000/- per month from the Darbar. After the death of Trimbak Rao, his son Narayan Rao, the deceased, was granted a cash Muafi of Rs. 38,844/- per annum. His name was mutated in place of his father. The order of His Highness the Maharaja Scindia of Gwalior passed in this connection and communicated by the Muntazim Jagirdaran, Gwalior State to Narayan Rao reads as follows:
'It is with the greatest pleasure that I write to inform you that His Highness the Maharaja Scindia has been graciously pleased to sanction the mutation of your name in place of your father, the late Sardar Trimbak Rao Sahib Patankar and to command that you shall be paid the cash Muafi of Rupees 38,844/-per annum. In this connection please note that you shall receive the robe of honour of this mutation on the occasion of the ensuing Vijayadashi Durbar which will be held on the 25th October, 1947. You are therefore hereby directed to take the trouble to presenting yourself at the Durbar for the investiture stated above.'
After the death of Narayan Rao in 1957, as already stated, the Government of Madhya Pradesh allowed the substitution of the name of his son in place of the deceased and the Muafi has been continued in favour of the son. The order of the Government reads as follows:
'With reference to your letter No. 13 dated 28-10-57 on the subject cited above, you are hereby informed that the Government of Madhya Pradesh has been pleased to grant substitution of Shri Trimbakrao alias Aditya Patankar under your guardianship for the aforesaid cash muafi.'
5. The charging section in the Estate Duty Act for levy of Estate Duty is Section 5(1) which reads as under:
'5(1). In the case of every person dying after the commencement of this Act, there shall save as hereinafter expressly provided, be levied and paid upon the principal value ascertained as hereinafter provided of all property, settled or not settled, including agricultural land situate in the territories which immediately before 1st November, 1956, were comprised in the States specified in the First Schedule to this Act, which passes on the death of such person, a duty called 'Estate Duty' at the rates fixed in accordance with Section 35.'
6. Briefly stated the questions to be considered in this reference are whether the Muafi held by the deceased Naravan Rao was property, what was the nature of that property and whether it passed on his death within the meaning of Section 5(1) of the Act.
7. As regards the question, whether the cash Muafi held by Narayan Rao was property, there can be no doubt that it was property. Indeed, the learned counsel appearing for the accountable person did not dispute this legal position that a cash grant is property. The question is covered by the decision of the Supreme Court in State of Madhya Pradesh v. Ranojirao Shinde, AIR 1968 SC 1053 at p. 1056, where it was held that a cash grant was property as it gave a right to sum of money. By virtue of the order of the Maharaja of Gwalior communicated to the deceased on 23rd October, 1947, he had a right to receive the cash grant annually and therefore, the cash grant must be held to be property.
8. Regarding the nature of the property, from the History of the Jagirdars, to which we have already referred, it becomes clear that originally a jagir was granted to Rao Saheb Mansingh, the ancestor of the Patankar family, which was later on converted into a cash grant for maintenance. In the beginning, it appears that a sum of Rs. 10,000/- per month (Rs. 1,20,000 per annum) was being paid, but it was later on reduced by Maharaja Jiwaji Rao Scindia to Rupees 5,000/- per month (Rs. 60,000/- per annum). Thereafter, when Trimbak Rao died the cash grant was further reduced to Rs. 38,844/- per annum and this amount was sanctioned as cash Muafi in favour of Narayan Rao. There is no original Sanad and the earliest document that we find is of the year 1918, when Maharaja Jiwaji Rao reduced the monthly allowance from Rs. 10,000/- per month to Rs. 5,000/- per month. The document does not show that the grant of maintenance was intended to be heritable. It is true that on the death of Trimbak Rao the grant was continued in favour of his son Narayan Rao, the deceased, but the amount was further reduced from Rs. 60,000/- per annum to Rs. 38,844/-per annum. That itself shows that there was no heritable right and the successor obtained the grant not by way of inheritance but by virtue of a fresh grant made by the Ruler.
This cash grant, which was initially granted in lieu of landed jagir, partook the nature of a jagir. A jagir, it has repeatedly been held, is normally for the life time of the holder lapsing on his death although not unusually renewed to his heir on payment of a Nazarana or fine; Gulabdas Jugjiwandas v. The Collector of Surat (1879) 6 Ind App 54: ILR 3 Bom 186 (PC); Umrao v. Bhagwati, AIR 1956 SC 15; Raja Rameshwar Rao v Raja Govind Rao, (1962) 1 SCR 618 at p. 628 : (AIR 1961 SC 1442 at p. 1447); Begum Suriya Rashid v. State of Madhya Pradesh, Civil App. No. 1168 of 1965 D/- 28-81968 (SC). In Umrao's case AIR 1956 SC 15 (supra), their Lordships observed as follows:
'Ordinarily a jagir is an assignment in land or money for the support of a certain dignity and for the troops annexed thereto. It is either conditional or unconditional. The assignment is for a stated term, and more usually, it is for the life-time of the holder, lapsing on his death, to the State although not unusually renewed to his heir on payment of a nazarana or fine. It is sometimes specified to be a hereditary one. In (1879) 6 Ind App. 54 : ILR 3 Bom 186 (PC), their Lordships of the Privy Council held that a jagir must be taken prima facie to be an estate only for life, although it may possibly be granted in such terms as to make it hereditary.'
Since a jagir is normally for the life time of the holder and lapses on his death, the burden was on the Revenue to produce material to show that the grant in the instant case was heritable. No material has been placed to give rise to an inference of habitability. The documents filed go to show that although the grant was continued in favour of the successor, it was varied and reduced; that leads to the conclusion that the successor of the last holder did not acquire the grant by inheritance, but by a new grant from the Government. Stress has been laid by the learned counsel for the Revenue on the word 'mutation' as it occurs in the order of the Maharaja Gwalior passed in 1947 and the order of the State Government passed in 1958. The word 'mutation' in these two orders is used according to the prevalent practice to signify the recognition of the new grantee. In fact these orders have the effect of making fresh grants in favour of the successor. In the absence of these orders, the successor would have received nothing. Considering the facts and circumstances of the case, in our opinion, the cash Muafi to Narayan Rao was not heritable and on his death it completely lapsed to the State, The continuance of the Muafi in favour of Narayan Rao's son by the Government of Madhya Pradesh in law amounts to making a new grant.
9. Coming to the question whether Muafi is property which passed on the death of Narayan Rao within the meaning of Section 5 of the Act, we are of opinion that as the Muafi lapsed on the death of Narayan Rao, it did not pass on his death. The word 'passes' as it occurs in Section 5(1) of the Act means 'changes hands': Nevill v. Inland Revenue Commissioners 1924 AC 385 at p. 389. When the Muafi held by Narayan Rao lapsed and thus came to an end, how can it be said that it passed or changed hands? On the finding that the Muafi was not heritable and was for Narayan Rao's life lapsing on his death, it must be held that it was not property passing on his death.
10. In view of the aforesaid discussion, we answer questions Nos. 1 and 2in the affirmative and question No. 3 inthe negative. The accountable person willbe entitled to her costs of this reference.Counsel's fee Rs. 150/- if certified.