1. This appeal is directed against the order of the Appellate Controller of Estate Duty, Ernakulam, dated 19-12-1977, in ED Appeal No. 6/1972-73/EKM, relating to the assessment on the death of Shri Rama Varma Pareekshit Thampuran, the Maharaja of the erstwhile State of Cochin, on 11-12-1964.
2. In pursuance of a notice under Section 55 of the Estate Duty Act, 1953 ("the Act"), the accountable person, Shri Rama Varma Kunjikidavu Thampuran, filed a statement before the Assistant Controller on 22-11-1971. A contention was raised that the estate of the Maharaja of Cochin is not assessable to estate duty in respect of the properties attached to the Maharaja and that the accountable person was, therefore, not liable to submit the account called for. It was further contended that the properties belonging to the Maharaja of Cochin, compendiously known as the Palliyara Muthalpidi Estate, did not pass under any of the provisions of the Estate Duty Act on the death of the Maharaja and that the Maharaja of Cochin was a corporation sole or, in the alternative, the holder of an office coming within the ambit of Section 7(4) of the Act. It was also contended that the Maharaja of Cochin lost his political and administrative powers as a result of the integration of the States in July, 1949 ; his personal rights, privilges and dignities were guaranteed by the Covenant and, therefore, the possession and enjoyment of the Palliyara Muthalpidi properties were the personal rights and privileges attached to the rulership of Cochin. Further, it was urged that the Ministry of States has also ruled that these properties will be considered as belonging to His Highness, the Maharaja of Cochin, and will devolve intact on his successors.
3. The Assistant Controller did not accept these contentions. He equated the Maharaja to a sthani and relied on the decision of the Madras High Court in the case of the S.C. Sree Manavikraman Raja, Zamorin Raja of Kozhikode v. CED  32 ITR 1 for the proposition that a sthani is not a holder of an office nor a corporation sole, but the sthanam is merely a place of dignity or honour. The observation that the expression "corporation sole" in Section 7(4) would only apply to cases of those offices which have by statute been designated as corporation sole and endowed with perpetual succession, was relied on.
The Assistant Controller held that the rights and privileges of the Maharaja did not constitute an office and that the Maharaja was neither a corporation sole nor the holder of an office.
4. The Assistant Controller noticed that after the integration of States, the Maharaja lost his political and administrative powers ; he was not a holder of an office to which duties of a public character were attached and he can only be treated as the holder of a sthanam and the Palliyara Muthalpidi properties are the properties attached to the sthanam. These properties are considered as the private properties of the Maharaja and devolved on his successor. The decision of the Supreme Court in CIT v. M.E.H. Mir Osman Alt Bahadur  59 ITR 666 was followed for concluding that the privileges granted to the Maharaja under Article 15 of the Covenant of Integration were only personal privileges which did not justify any claim to the immunity from taxation.
5. With regard to the claim that if Palliyara Muthalpidi Estate is held as sthanam property, only the share of the property inherited by the legal heir of the sthani is liable to estate duty, the Assistant Controller relied on the decision of the Kerala High Court in ACED v.Balakrishna Menon  64 ITR 223 affirmed by the Supreme Court vide M.K. Balakrishnan Menon v. ACED-cum-ITO  83 ITR 162. In that case, it was held that on the death of a previous sthani the whole of the sthanam properties passed on to the successor. The Assistant Controller, accordingly, held that the entire value of the Palliyara Muthalpidi Estate passed on the death of the deceased under Section 7.
He also held that Section 6 of the Act is applicable as the deceased was at the time of his death competent to dispose of the properties.
Other objections relating to valuation were also disposed of.
6. In an appeal preferred by the accountable person before the Appellate Controller, this finding relating to the chargeability of duty on the Palliyara Muthalpidi Estate was challenged. It was contended that the properties coming under the Palliyara Muthalpidi were not the personal properties of any individual reigning sovereign of the Cochin, that the monarch had no power of disposal over the properties, that they belonged to the office of kingship and not to the king himself, that they were immutable, indivisible, impartible and inalienable and that, therefore, these properties did not pass on the death of the ruler as contemplated in Section 5(1) of the Act, nor could be deemed to have passed on his death under Section 6 or 7(1).
The contention that the Maharaja is a corporation sole and that, therefore, the Palliyara Muthalpidi properties are saved by Section 7(4) was reiterated. It was urged-that the Maharaja of Cochin cannot be equated to the Zamorin of Calicut or considered as a sthani.
7. The Appellate Controller examined these contentions in the light of the materials produced and noticed the nature and incidents of the estate and stated thus in the order : It would be useful to go into the nature and incidents of Palliyara Muthalpidi properties. The origin of Palliyara Muthalpidi is lost in antiquity. It is probably as old as the throne of Cochin State itself. It consisted of both the corpus of movable as well as immovable properties and the accretions therefrom. It included several palaces scattered over the erstwhile State of Cochin, more than 5,000 acres of agricultural lands (in the possession of tenants for a long time), investments in pronotes, shares in companies, deposits with banks and cash in hand. There can be little doubt about the fact that successive rulers have regarded the institution as sacred. Alienation of Palliyara Muthalpidi properties by the monarch was never resorted to and was considered as almost sacrilegious. The properties were considered and treated as those belonging to the reigning monarch, to be handed over with the accretions in favour of the succeeding monarch ; the former forwarded to the latter the keys of the boxes, the State seals, the State turban, and the jewels were also handed over on the date of abdication. These facts could be gleaned from a Full Bench decision of the Travancore High Court dated 18th September, 1923, reported in 13 TLJ 290.
8. The observation of the High Court in that case that there is no escape from the conclusion that the Palliyara Muthalpidi belongs to, or is in the absolute control of, the ruler of Cochin for the time being was also noted. The Appellate Controller concluded that the properties coming under the Palliyara Muthalpidi were attached to the office of kingship, that they were inalienable and impartible and that the claim that they did not belong to the Maharaja in his personal capacity is correct, at least till such time as the Maharaja of Cochin remained a sovereign ruler.
9. The Appellate Controller then considered whether the Maharaja is a corporation sole. The point of distinction between Palliyara Muthalpidi and sthanam property, with particular reference to the observations in CIT v. Mukandilal Harbanslal  32 ITR 1 (All.), was pointed out and the Appellate Controller accepted the claim that the Maharaja of Cochin was a corporation sole, at least till such time as he remained a sovereign.
10. The issues whether the Palliyara Muthalpidi properties retained their original inalienable and impartible character after the Maharaja of Cochin ceased to be a sovereign and whether the institution of the Maharaja of Cochin remained a corporation sole after he lost his political and ruling powers was then considered and answered in the negative, i.e., against the appellant. With the integration coming into force with effect from 1-7-1949, the Maharaja lost his sovereignty in the State, and his ruling and political powers. By virtue of Article 14 of the Covenant of Integration, the ruler became entitled to an annual privy purse. Article 17 guaranteed the personal privileges, dignities and titles of the ruler. From Article 15(1) and (2) and the D.O. letter dated 19-2-1954, from the Ministry of States addressed to the Maharaja, the Appellate Controller concluded that with the loss of sovereignty and the political power and with the recognition of the Government of India that the Palliyara Muthalpidi properties became private properties, the Maharaja ceased to be a corporation sole and the Palliyara Muthalpidi properties were no longer properties attached to the reigning monarch for the time being. Reliance was also placed on the decisions of the Supreme Court reported in AIR 1961 SC 1260 and Vir Rajendra Singh v. Union of India AIR 1970 SC 1946. Ultimately, it was held that the movable and the immovable properties of the deceased, Shri Rama Varma Pareekshit Thampuran including the Palliyara Muthalpidi properties, are dutiable under Sections 5(1), 6 and 7(1) and that Section 7(4) has no application. Thus, the Appellate Controller agreed with the finding of the Assistant Controller that these properties are chargeable to duty.
11. Shri Rama Varma Kunjikidavu Thampuran, the principal accountable person, died during the pendency of the appeal before the Appellate Controller. Shri Ravi Varma Thampuran, the seniormost male member of the royal family, executed a renunciation deed, on 9-8-1975, renouncing his right to the Palliyara Muthalpidi Estate and the two palaces belonging to the deceased Maharaja. A civil, suit for partition was instituted by the junior members as O.S. 26 of 1976 before the sub-court, Ernakulam, and Shri Rama Varma Ravi Appan Thampuran was appointed as receiver of the properties in the schedule, in that suit, including the Palliyara Muthalpidi Estate. The receiver, who got himself impleaded before the Appellate Controller, being aggrieved by the order of the Appellate Controller, has preferred this appeal.
12. The main contention of the appellant, as urged in grounds of appeal Nos. 1 to 12, is that the Palliyara Muthalpidi Estate is not chargeable to duty. It is claimed that this estate is neither the personal property of the Maharaja nor family property, but is property attached to the rulership of Cochin and held by the Maharaja as a corporation sole. The contention is that the property does not, therefore, pass under Section 5 and cannot be deemed to tax pass under Section 6 or 7(1).
13. Section 5(1) provides for the levy of estate duty and says, inter alia, that duty is payable upon the principal value of all properties which pass on the death of a person at the rates fixed in accordance with Section 35 of the Act. The expression "property passing on death" is understood as property changing hands. "Property" as defined in Section 2(15) of the Act includes any interest in property movable or immovable. "Property passing on death" includes as stated in Section 2(16) of the Act, property passing either immediately on the death or after "any interval, either certainly or contingently. Section 6 provides that property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death. The provision of Sub-section (1) of Section 7 is that property in which the deceased, or any other person had an interest ceasing on the death of the deceased, shall be deemed to pass on the deceased's death to the extent to which a benefit accrues or arises by the cesser of such interest. Sub-section (4) of Section 7 provides that the provisions of Sub-section (1) shall not apply to the property in which the deceased or any other person had an interest only as holder of an office or recipient of the benefits of a charity, or as a corporation sole. The Explanation thereunder is, however, to the effect that the holder of a sthanam is neither the holder of an office nor a corporation sole within the meaning of this sub-section.
14. The claim of the appellant is that there is no passing of the estate as stated in Section 5 on the death of the Maharaja. It is stated that since the Maharaja, as the ruler of the State of Cochin, is holding the estate, the rulership continues and when one Maharaja dies the properties get vested in the succeeding Maharaja, such passing to his successor in office is not what is contemplated by the provisions of the Act. It is said that the Palliyara Muthalpidi Estate is not alienable and cannot, therefore, be property deemed to-pass under Section 6. The nature of the property is said to be such that the Maharaja for the time being had only the right to enjoy the income from the estate and he could not alienate or even charge the estate and the estate intact passed to his successor Maharaja. It is then contended that the Maharaja as a ruler is the holder of an office, the Palliyara Muthalpidi Estate is attached to that office and, being property held by the holder of an office, the estate falls under Sub-section (4) of Section 7 and is not chargeable to duty as property deemed to pass under Sub-section (1).
15. Shri Rama Varma Pareekshit Thampuran, the Maharaja of Cochin, was the ruling chief of the State of Cochin till the integration of the Travancore and Cochin States in July 1949. In terms of the Covenant entered into, the Palliyara Muthalpidi was declared as the private property of the Maharaja. In the plaint filed by the junior members of the former ruling family of Cochin as O.S. No. 29 of 1976 in the Subordinate Judge's Court, Ernakulam, this estate is described as sthanam property. Therein it is stated that as per the customary law of succession in Cochin State, the senior most male member of the family succeeds to the Gadi of Cochin, that the Karanavan of the family invariably becomes the ruler, i.e., the Maharaja. It is urged in para 4 of the plaint that, as in the case of other aristocratic families in Malabar, there was a sthanam in the erstwhile Cochin ruling family attached to the Karanavanship of the family. This was originally known as Pettipoottu and in later years came to be known as the Palliyara Muthalpidi ; the legal incidents of the Palliyara Muthalpidi estate is purely that of the institution known as sthanam in customary Malabar law. These averments are not accepted as correct by the appellant. It is, however, clear from what has been stated by the Full Bench of the Travancore High Court in the case of Mooply Valley Rubber Co. Ltd. 13 TLJ 297 that Palliyara Muthalpidi was an impartible estate which, under the customary law governing the former ruling family of Cochin, devolved on the senior male member of the family who ascended to the "Musnad", that the Maharaja of Cochin, as a corporation sole, was the holder of the estate and that the estate was in the absolute control and enjoyment of the reigning sovereign for the time being. It is, therefore, clear that the estate was held by the deceased Maharaja as a corporation sole until the integration of the State in 1949. This position is conceded by the revenue.
16. Shri Sankara Menon, the learned counsel for the appellant, however, maintains that even after integration the rulership continued as an institution. The Maharaja had been holding the estate, thereafter, as the holder of an office or as corporation sole and, therefore, the estate is not chargeable to duty. The terms of the Covenant entered into between the rulers of Travancore and Cochin, on integration of the two States with the concurrence and guarantee of the Government of India, and the constitutional provisions contained in Articles 291, 366(15), 366(16) and (22) are referred to in this context. Article 8(f) of the Covenant vests the administration f temples and devaswoms in a Board, providing that the regulation and Control of all rituals and ceremonies in the temple specified shall continue to be exercised by the Maharaja of Cochin. Article 8(e) enables the Maharaja to nominate a member to the Cochin Devaswom Board. Article 14 entities the ruler of each State to receive annually from the revenue of the State for his privy purse amounts specified in the Schedule. The succession, according to law and custom, to the Gadi of each covenanting State and to the personal rights, privileges and dignities and titles of the ruler thereof had been guaranteed under Article 17. A ruler is entitled under Article 15 to the full ownership, use and enjoyment of all private properties belonging to him. Under Article 21 of the Covenant the power of suspension, remission or commutation of death sentence is retained. The appellant, on the basis of these terms of the Covenant and provisions of the Constitution, contends that even though the ruling powers were taken away, some powers, duties and privileges continued to exist even after the accession and the rulership of the Maharaja continued as an office.
17. It is pointed but that under Article 15 of the Covenant the two rulers are entitled to continue in possession and enjoyment of their private properties as distinct from State properties. The Palliyara Muthalpidi estate has been included as the private property of the Maharaja of Cochin as distinguished from State properties. This, it is said, will go to show that the Palliyara Muthalpidi is not the personal private property of the Maharaja. The letter, dated 19-2-1954, issued by the Government of India to the Maharaja stated that, in accordance with the law of succession in Cochin and the customary law relating to the ruling family, the properties declared as private properties and included in the inventory will be considered as belonging to His Highness in his capacity of Maharaja of Cochin and would devolve intact on his successors. The argument advanced is that the capacity of the Maharaja means as ruler and not his personal private capacity, that these are the private properties of the ruler of Cochin and not of the person who becomes the ruler for the time being. It is said that "devolve intact" on the successor means that the whole property as such, without being alienated or transferred, devolves not on the legal representative or legal heirs of the Maharaja but on his successor in office. The argument is that the fact of succession to a particular office has been thus taken into consideration by the Government of India in passing the above order, thereby recognising and acknowledging succession to the office of the rulership of Cochin. According to Article 366(22) of the Constitution, "ruler", in relation to an Indian State, means the Prince, Chief or other person by whom the Covenant was entered into and who for the time being is recognised by the President as the ruler of the State and includes any person who for the time being is recognised by the President as the successor of such ruler.
This definition, according to the appellant's learned counsel, recognised the rulership as an institution and succession to the office of rulership.H.H. Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur v. Union of India AIR 1971 SC 530 was referred to, in support of the contention that rulership is an institution recognised under the Constitution. In that case it had been held that the institution of rulership is an integral part of the constitutional scheme. The Maharaja of Cochin died in November 1964 before the Constitution (26th Amendment) Act, 1971. It is, therefore, maintained that the position was the same on that date, that the deceased was thus holding the estate only as holder of an office and on his death it devolved on the succeeding Maharaja who was holding the office and, therefore, the estate is not chargeable to duty.
18. As rightly pointed out by Shri N.R.K. Nair, the learned counsel for the revenue, this claim of the appellant cannot be accepted. Even though it is conceded that the estate was being held by the Maharaja of Cochin while he was the monarch, as a corporation sole, on integration of the State, the Mararaja ceased to be the reigning sovereign. The Maharaja ceased to retain any vestige of sovereign rights qua the former State. The Maharaja acquired the status of an ordinary citizen of India. The ruler recognised by the President rules over no territory and exercises no sovereignty over any subject. He has no status of a potentate and no privileges which are normally exercised by a potentate. He is a citizen of India with certain privileges accorded to him because he had surrendered his territory, his powers and his sovereignty. He is neither a corporation sole nor the holder of an office.
19. "Corporation sole", as held in Manvikraman Raja v. CED (supra), applies only to the cases of those offices which have, by statute, been designated as corporation sole and endowed with perpetual succession. A holder of an office would be a person who has certain duties of public character to perform. The word "office" should mean a position or place to which certain duties are attached, especially one of a more or less public character. The holder of a sthanam is not the holder of an office. A person occupying a position of dignity or honour cannot be said to be a holder of an office.
20. Under Article 3 of the Covenant, all rights, authority and jurisdiction belonging to the ruler of either covenanting states, which appertain or are incidental to the Government of that State, vested as from the appointed day in the united state ; all duties and obligations of the rulers of the states, pertaining or incidental to the Government of that State, devolved on the united state ; all assets and liabilities of the covenanting states became the assets and liabilities of the united state. The Maharaja of Cochin was, thus, divested of all sovereign powers in the State of Cochin which merged with the State of Travancore. He ceased to exercise the duties and obligations of the ruler of the State. What has been guaranteed under Article 17 is the status as ruler and the right to succeed to the Gadi of the state in accordance with the customary law applicable to the royal family. All the personal rights and privileges retained are attached to the office of dignity. The nominal powers in the administration of the devaswoms and the remission of the capital sentence are also, in the context, privileges and not official duties. It is clear that the institution of rulership recognised under the Constitution for the purpose of identifying the person entitled to the benefits guaranteed under the Covenant is only an office of dignity or status and that the position of the ruler is analogous to that of a sthani. The properties attached to such an office had the attributes of sthanam properties and the person holding the properties is only a sthani.
21. Shri Sankara Menon attempted to draw the distinctions between the Maharaja's palace estate and sthanam properties. Even though the ruling powers are lost, the Maharaja had certain other powers and duties, namely, the power to nominate to the Devaswoms Board, control over the Devaswoms, succession to the Gadi, etc. As Palliyara Muthalpidi is a private property which devolves, intact, on the successor, it is argued that the estate cannot be compared to the estate of Zamorin and the decision of the Madras High Court reported in Mamikraman Raja v. CED (supra) is distinguishable. The incidents of the institution of sthanam are that the seniormost member of the family becomes the sthanatndar, it primarily means a dignity and denotes the status of the senior Raja in a Malabar Kovilagam or Palace and the position of the sthanamdar is analogous to that of a holder of an impartible estate. The Maharaja of Cochin, after he lost the sovereign powers, is in the position of a sthanamdar. We do not find any force in the contention of Shri Sankara Menon when we conclude that what is recognised, under the terms of the Covenant and the provisions of the Constitution, is only an office of dignity and not rulership as such, and the estate is only private property of the person holding for the time being that position of dignity as ruler. We have only to quote the observations of the Supreme Court in the case of Madhav Rao Scindia (supra) analysing the position of the "ruler" after integration, thus : The Rulers had lost their territories and their right to rule and administer them. They were left only a recognition of their original title, a privy purse, their private properties and few privileges.
These rights were the only indicia of their former sovereignty but they enjoyed them by the force of the Constitution although in every respect they were ordinary citizens and not potentates. The Constitution ensured the position of the Ruler and his successor with regard to the Privy Purse and privileges, although leaving the President the right to confer that status on a Ruler by recognition.
(p. 551) 22. We shall also refer to some of the decisions cited at the bar, in support of the position that the rights that were guaranteed under the Covenant and the Constitution of India relate to the privy purse and privileges only. The Supreme Court held in M.E.H. Osman All (supra) that the privileges guaranteed to the respondent under Articles 3 and 4 of the Covenant were only personal privileges which did not justify any claim for immunity from taxation. In Vir Rajendra Singh v. Union of India (supra) it was held that "the recognition of the ruler is a right to succeed to the Gaddi of the ruler. This recognition of rulership by the President is an exercise of the political power vested in the President and is, thus, an instance of purely executive jurisdiction of the President. The act of recognition of rulership is not, as far as the President is concerned, associated with any act of recognition of the right to private properties. It cannot be said that the claim to recognition of rulership is either purely a matter of inheritance or a matter of descent by devolution. Nor can claim to recognition of rulership be based only on covenants and treaties." The Gujarat High Court in Pratapsinhji N. Desai v. CIT reviewed the position of the ex-ruler with particular reference to the terms of the covenant and the provisions of the Constitution and held that the Covenant guarantees only that law and custom of succession which was applicable to the Gaddi of the covenanting States and it did not recognise the rule of succession to all other properties.
The Palliyara Muthalpidi estate was an impartible estate which, under the custom and law of succession governing the former ruling family of Cochin, devolved on the seniormost male member of the family on his succeeding to the Musnad, and the Maharaja of Cochin was holding the estate as a corporation sole until the integration of the State in July 1949. Thereafter, the Maharaja had no sovereign powers. He was no longer a corporation sole or a holder of an office. The office of the Maharaja was only a position of rank and dignity analogous to that of a sthanamdar. The estate was the private property of the deceased held in his status as Maharaja, viz., sthanam properties. The succession to the estate is thus under the customary law governing the former ruling family subject to the general law.
24. Shri Rama Varma Pareekshit Thampuran died after the Hindu Succession Act, 1956, came into force. Section 5(ii) and (in) of the Hindu Succession Act exempted certain impartible properties from the operation of the Act. As has been held by the Gujarat High Court in the case of Pratapsinhji N. Desai v. CIT (supra) the private property of the ruler is not an estate which descends to a single heir under the terms of the Covenant or agreement entered into by the ruler with the Government of India or by the terms or enactments passed before the commencement of the Act. The customary law, therefore, stands abrogated under Section 4 of the Hindu Succession Act, and the devolution of property is governed by the provisions of the Hindu Succession Act.
25. We have noticed that the estate held by the deceased as the Maharaja of Cochin at the time of his death had all the attributes of sthanam properties. By virtue of the provisions of Section 7(3), when a sthanamdar , lies after the enactment, the sthanam properties shall devolve upon the members of the family to which the sthanamdar belonged and the heirs of the sthanamdar as if the sthanam properties had been divided per capita, immediately before the death of the sthanamdar, among himself and all the members of his family then living, and the shares to the members of the family and the -.heirs of the sthanamdar shall be held by them as their separate property.
26. It has been contended for the appellant that even if the estate is to be treated as the sthanam property, the property that passes on the death of the sthanamdar is only his per capita share of the sthanam property and not the whole of the sthanam property. The Supreme Court in the case of M.K. Balakrishna Menon v. ACED (supra) considered this question and held that the legal fiction is intended solely for ascertaining the shares of the members of the family and when the sthanamdar dies the whole property passes and the entire properties are liable to estate duty under the Act. The argument is, therefore, not available to the appellant.
27. The Maharaja was entitled to, even according to the appellant, the beneficial enjoyment of the properties which we have found had the attributes of sthanam properties. Such beneficial interest is property that passes under Section 5. It is not correct to say that the Maharaja had no power for disposal. The Maharaja was entitled to alienate the property or encumber the same and it was under his absolute control.
Section 6 is also thus attracted. When it is found that the estate had the incidents and characteristics of sthanam properties the exemption under Section 7(4) does not apply and the property must be deemed to pass under Sub-section (1) of Section 7. Accordingly, we hold that the Palliyara Muthalpidi eswite had been rightly included in the estate of the deceased and this decision of the Appellate Controller calls for no interference.
28 to 32. [These paras are not reproduced here as they deal with minor issues].