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The Controller of Estate Duty, Delhi Vs. Late A.T. Sahani Through L.A. Sahani, New Delhi - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtDelhi High Court
Decided On
Case NumberEstate Duty Reference Appeal No. 1 of 1968
Judge
Reported inILR1969Delhi1115; [1970]78ITR508(Delhi)
ActsEstate Duty Act, 1953 - Sections 2(15)
AppellantThe Controller of Estate Duty, Delhi
RespondentLate A.T. Sahani Through L.A. Sahani, New Delhi
Advocates: A.N. Kirpal,; D.K. Kapur,; B.D. Sharma and;
Cases ReferredFeay v. Bai
Excerpt:
property - compensation - section 2 (15) of estate duty act, 1953 - employee (respondent) of indian airlines corporation died in air crash while on duty - compensation received by widow - controller of estate duty included amount of compensation in principal value of estate of deceased - appeal filed - amount excluded from principal value of estate of deceased - tribunal upheld decision in appeal - question whether compensation amounted to property as per section 6 referred before court - deceased competent to dispose of compensation if he had been alive - such right passes on to widow on his death - held, compensation amounted to property within meaning of section 6. - - (1) this case raises an interesting but difficult point under the estate duty act, 1953 (hereinafter called the.....hardayal hardy, j. (1) this case raises an interesting but difficult point under the estate duty act, 1953 (hereinafter called the act). the facts are nto many and are also nto in dispute.(2) the deceased a. t. sahani who was an employee of the indian airlines corporation died on 11th september, 1963 in an air crash while on duty. under rule 159 of the indian airlines corporation (flying crew) services rules, a member of the flying crew was entitled to certain compensation at specified rates in the event of his death or an injury caused by an accident during or as a result of air journey performed as such in the corporation's service. the rule as it stood at the material time reads as under :- 'thecorporation shall pay compensation in the undermentioned circumstances and at the rates.....
Judgment:

Hardayal Hardy, J.

(1) This case raises an interesting but difficult point under the Estate Duty Act, 1953 (hereinafter called the Act). The facts are nto many and are also nto in dispute.

(2) The deceased A. T. Sahani who was an employee of the Indian Airlines Corporation died on 11th September, 1963 in an air crash while on duty. Under Rule 159 of the Indian Airlines Corporation (Flying Crew) Services Rules, a member of the flying crew was entitled to certain compensation at specified rates in the event of his death or an injury caused by an accident during or as a result of air journey performed as such in the Corporation's service. The rule as it stood at the material time reads as under :-

'THECorporation shall pay compensation in the undermentioned circumstances and at the rates indicated below. Such compensation is payable only when the death or an injury is caused by an accident during or as a result of air journey performed as a member of the flying crew in the Corporation's service.

(1) Death resulting from air journey on duty Rs.Senior Captain (Basic Pay exceeding Rs. 1,250) .. .. .. 45,000.00 Captain and Sr. Flight Navigator (Basic Pay exceeding Rs. 1,050.00) . . 40,000.00 Jr. Captain, Flight Navigator & Sr. Radio Officer in selection grade (Basic pay nto exceeding Rs. 1,050.00) 35,000.00 First Officer, Sr. Radio Officer & Flight Engineer (Basic pay nto exceeding Rs. 6,50 .. .. .. 30,000 First Officer, Sr. Radio Officer, & Flight Engineer (Basic pay nto exceeding Rs. 650.00) .. .. 25,000 Probationary Flight Navigator, .. 25,000 Second Officer, Probationary Flight Engineer & Radio Officer .. .. 20,000 Air Hostess and Steward .. .. 15,000 Probationary Radio Officer, Protionary Air Hostess and Probationary Steward .. .. .. .. 10,000 The compensation payable under the said rule was in addition to the compensation which the Corporation had agreed to pay under an agreement described as Pilto agreement entered into with the Corporation on 1st April 1960 according to Rule (iv) where by it was provided that the Corporation shall pay compensation for the death of a pilot, a maximum of 36 times his monthly basic pay if such death occurred in the circumstances mentioned in the above-mentioned Service Rules or while traveling on duty in surface transport provided by the Corporation or its nominated agents

(3) In accordance with the terms of the aforesaid agreement between the deceased and his employer, a sum of Rs. 68,300.00 was received by his widow as compensation.

(4) The Assistant Controller of Estate Duty included, infer alia, the said amount of compensation in the principal value of the estate of the deceased under the head 'movables'.

(5) On appeal by the 'accountable person', the Zonal Appellate Controller of Estate Duty, Delhi held that this was a case where compensation was payable to the legal heirs only in the event of death of the deceased. There could thereforee be no question of the deceased having any interest in the compensation. He further observed that the mere right of nomination which the deceased had exercised in this case, was of no consequence. He accordingly excluded the sum of Rs. 68,300.00 from the principal value of the estate of the deceased.

(6) The Revenue appealed against the decision to the Appellate Tribunal which confirmed the exclusion. The Tribunal held that only the property in which the deceased had an interest in his life-time would be deemed to be the property over which he could be said to have a power of disposition. In the case of a compensation receivable on his death such compensation came into being only by reason of the death of the deceased. As such it could nto be said that the deceased had any interest in it during his life-time. The Tribunal thereforee held that the property in question was nto one over which the deceased had any power of disposition.

(7) As the Tribunal's order gave rise to a question of law; at the instance of the controller, the following question was referred under section 64 of the Act, to this Court for the opinion.

WHETHERon the facts and in the circumstances of the case, the compensation amounting to Rs 68300.00 was a property within the meaning of Section 6 of the Estate Duty Act, 1953

THEAct does nto define the term property except by way of an inclusive definition of the term in section 2(15) which reads as under:

S. 2(15) 'property' includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale and also includes any property converted from one species into another by any method; Explanationn 1. The creation by a person or with his consent of a debt or other right enforceable against him personally or against property which he was or might become Competent to dispose of, or to charge burden for his own benefit, shall be deemed to have been a disposition made by that person, and in relation to such a disposition the expression 'properly' shall include the debt or right created.

'EXPLANATION2.-The extinguishment at the expense of the deceased of a debt or other right shall be deemed to have been a disposition made by the deceased in favor of the person for whose benefit the debt or right was extinguished, and in relation to such a disposition the expression 'property' shall include the benefit conferred by the extinguishment of the debt or right.' SECTION 5 is the charging section. It imposes estate duty in the case of every person dying after the commencement of the Act upon the principal value of the property passing on his death. It also determines what properties passing on a death are liable to charge and at what rates. Section 2(16) which defines the expression 'property passing on the death' is also an inclusive definition and gives neither the definition of the word 'property' nor does it attempt to lay down what property will be held under the Act to have passed on the death'.

S. 2(16) 'property passing on the death' includes property passing either immediately on the death or after any interval, either certainly or contingently, and either originally or by way of substitutive limitation and 'on the death' includes at a period ascertainable only by reference to the death;'

SECTION 6 to 17 deal with properties which actually do nto pass according to the provisions of Section 5 but are deemed to pass under a fiction created by these sections. In this case we are mainly concerned with Section 6 which reads as under :- PROPERTYwilhin Disposing Capacity.-- Property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death.'

THEquestion as phrased postulates as if the present case is nto covered by Section 5 and the matter has to be discussed in the light of the artificial meaning given to the expression 'property which passes on the death' in Section 6. But as I shall presently show that is nto the correct way of approaching the problem. In order to appreciate the precise content of this expression, it is necessary to understand its true meaning under both these sections. The question thereforee primarily resolves itself into one of interpretation of these two sections.

(8) Now, as observed by P. N. Bhagwati,J. in a bench decision of Gujarat High Court in Mahindra Ramhhai Palel v. Controller of Estate Duty., Gujarat (1) the expression 'passes on the death' might have created some difficulty of interpretation but two generations of judicial decisions have imparted to that expression as occurring in section 1 of the U. K, Finance Act, 1894, which imposed for the first time in England the duty called 'estate duty'. exact shades of meaning that could nto have been originally discerned and our Act being modelled on the English statute it would be a fair presumption to make that when the lagislature enacted our Act, the lagislature used the expression 'passes on the death' in the sense in which it had been judicially interpreted in England. We might, thereforee usefully refer to English decisions on the interpretation of section I of the U. K. Finance Act, 1894, in order to comprehend the true import of passing of property referred to in section 5 of our Act,' As in this case we are mainly concerned with Section 6 we may as well turn to Section 2 of the U. K. Finance, Act. 1894 which is in terms also identical with those of section 6 to 17 of the Act. Sections 1 and 2(1)(a) in so for as they correspond to sections 5 and 6 read as under :-

SECTION 1.-'In the case of every person dying after the commencement of this Part 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, real or personal, settled or nto settled which passes on the death of such persons a duty, called 'estate duty', at the graduated rates hereinafter mentioned and the existing duties mentioned in the First Schedule to this Act shall nto be levied in respect of property chargeable with such estate duty.'

SECTION 2(1) -'Property passing on the death of the deceased shall be deemed to include the property following, that is to say:- (A)Property of which the deceased was at 'the time of his death competent to dispose;....................,.......

(9) It may be mentioned that even the English Act did nto give any definition of this expression but by 1953 when our Act, which as said above, was modelled on the English statute, came to be enacted, the expression had acquired a precise content and meaning. The classic meaning of the expression was given by Lord Parker of Waddington in Attorney Genera! v. Milne(2) when he said 'The expression 'passing on the death' is nto further defined, but is evidently used to denote some actual change in the title or possession of the property as a whole which takes places at death. For the purpose of this section it is absolutely immaterial to whom or by virtue of what disposition the property passes.''

INNevill v. Commissioners of Inland Revenue, Viscount Haldane L. C. while dealing with Sections 1 and 2 of the Finance Act, used a much simpler phraseology when he observed:-

'THEscheme of the Act is' that a new duty called estate duty, is to be levied on the principal value of the property settled or nto settled, which 'passes' on death. 'Passes' may be taken as meaning 'changes hands.' The principle is contained in S. 1 .Sect. 2 combines definitions of such property with the extension of the application of the principle laid down in S.I to certain cases which are nto in reality cases of changing hands on death at all, but are to such an extent in an analogous position that it has been deemed proper in these instances to impose a similar tax. These cases are technically altogether outside S.1. That section is concerned with all property changing hands, whether under the previsions of an instrument setttling by conferring successive rights to the same property, or by virtue of the general law prescribing the succession to property. It is a change of the hands into which the property comes that is the occasion of the tax, whether the property is settled or not.'

SECTIONS 6 to 17 of the Indian Act no doubt mention different kinds of property which are deemed to pass, but as was observed by Lord Radcliffe in Sanderson and others, v. Inland Revenue Commissioners (4) with reference to section 1 and 2 of the U.K. Finance Act, estate duty is net charged by the Act upon two different kinds or classes of property, property which passes in the natural sense and property which is deemed to pass by virtue of special statutory provision.

(10) What sections 6 to 17 provide is that property passing on death is deemed to include certain kinds of property or, perhaps more accurately certain property in certain situations and is nto to be deemed to include certain property in other situations. Section 5 and sections 6 to 17 like sections 1 and 2 of the U.K. Finance Act are however mutually exclusive. That they were mutually exclusive, was indeed the view that was held at one time and it had the high authority of Lord Macnaghten who said in Earl Cowley v. Inland Revenue Commissioner (5) that 'if the case falls within Section 1 it cannto also come within section 2. The two sections are mutually exclusive.' Lord Halsbury who too was in that case, also appeared to take the same vievv' as Lord Macnaghten. But in Public Trustee v. Inland Revenue Commissioners (6) all the law Lords including Viscount Simonds and Lord Radcliffe who took part in that decision, were uniformly critical of the above-mentioned dictum of Lord Macnaghten in Cowley's case.

(11) For the decision of the present case neither the facts in Cowley's case nor the controversy about the correctness of Lord

MACNAGHTEN'Sdictum are of much releavence except that the view regarding mutual exclusiveness of sections 1 and 2 which had held the field for nearly sixty years, inspire of occasional hesitant doubts cast on it in some decisions, was finally discarded by the House of Lords in 1960 Appeal Cases 398 and the true impact of Section 2(1) on Section 1 was described by Lord Radcliffe in these words:-

'ITSpurpose is to explain and refine upon the meaning of the words 'property. . . .which passes on .. .. death' which section 1 had declared to be subject to the charge of duty. Sub-section (1) thereforee selects certain categories of property and, aided by the interpretation section, S. 22, brings them expressly under the description of property passing on death, indifferent to the question whether, if it itself had nto been part of the original scheme of the Finance Act, 1894, any one of those categories or any particular form of property falling within one of the categories would or would nto have been treated by the general words of section 1. I can see no significance one way or the other in. the fact that it declares its purpose by saying that the categories selected shall be 'deemed' to be included in the 'property passing' which is charged by section 1. Such a phrase gives statutory certainty to what might otherwise be in some aspects uncertain and, in a few, impossible. Thus sub-section (1) (a) names a category, 'Property of which the 'deceased was.... competent to dispose, which seems plainly to embrace all property which was within his absolute disposition at his death.'

(12) The conclusion that emerges from the above discussion is that it is section I of the English Act which as I have said before, corresponds to section 5 of the Indian Act and no other section that imposes the charge of estate duty, that the charge so imposed is imposed upon property that passes on death and on no other property, and that the effect of section 2(1) (a) of the English Act which corresponds to section 6 of the Indian Act is to give to the word 'passes' in section 1(a) meaning wider and less natural than it would have had if section 2(1)(a) had nto been enacted.

(13) In order, thereforee, to enable the Revenue to bring to charge any property for the purpose of estate duty by taking recourse to section 6, the attempt must also satisfy the test that it was the property of the deceased in the sense in which it is defined in Section 2(15).

(14) I have already said that the Act does nto define the word 'property' except by way of an inclusive defination. The restraint appears to be deliberate because the term cannto be precisely defined and any attempt to do so will take us to the realms of metaphysics. However, according to Lord Halsbury in New York Breweries Co. v. Attorney General (7) page 62, a case referred to by Grover J. (as his Lordship then was) in Mwut Singh v. The Collector of Eshite Duty (8) 'Property is nto something necessarily connected with physical possession and capable thereforee of being treated by manual delivery; but if one comes to analyze its meaning, it is manifest that a great many things, chosen in action, are in the ordinary sense of the word 'property' and capable of being treated nto indeed by physical handling, but by the documents of title and investments recongnised by the taw as transferring the title, the incorporeal right to sue (that is what is strictly comprehended in such phrases), documents which are capable of being enforced and treated as subjects of property.'

(15) It is thereforee in this general and comprehensive sense that we have to consider whether the deceased had any interest in the compensation payable by the Corporation to his legal heirs on the happening of the event and in the -circumstances mentioned above.

(16) I now pass on to the other aspect of the case, namely the 'passing of the property on death'.

WEhave already seen that both Lord Parker of Waddingion in Attorney General vs. Milne and Viscount Haldane (2) in Nevill v. Inland Revenue Commissioners (3) were clearly of (he opinion that the expression 'passing on the death' was evidently used to denote some actual change in the title or possession of the property as a whole which took place at death or that. there was changing of hands. In other words there must be some property and that includes interest in that property over which the deceased had some kind of title which was in his possession during his life time immediately before his death and which changed hands on his death. In Adamson and another v. Attorney General (9) Lord Russell of Killowen adverted to the meaning of the expression 'passing on the death' as given by Lord Parker in these words 'Further, a phrase of Lord Parker in Attorney General v. Milne (2) is quoted as showing that the eminent authority took the view that whenever any change of title to property takes place at death property passes within the meaning of section 1. I cannto so interpret what Lord Parker said. As I read his statement he means no more than that when property passes there must be some change in the title to or possession of the property as a whole which takes place on the death.'

(17) In whatever way one may look at the meaning of the expression 'passing on the death', so far as section 5 is concerned, it cannto be disputed that before the property passes the deceased must have had some title to or possession of the property. The question is whether by enlarging the ambit of that expression in section 6 the legislature has brought about any such radical change in its meaning. Is it possible that a person should nei- ther have any title in the property nor should he be in possession thereof and yet he should be competent to dispose of it ?. Counsel for the Revenue argued that compensation was payable to the heirs of the deceased pursuant to a contract of employment between, the deceased and his employer, the Indian Airlines Corporation. It was a remuneration to which the deceased was entitled under the terms of his employment; only its payment was conditional upon his death being caused by an accident during or as a result of air journey performed as a member of the flying crew in the service of the Corporation or while traveling on duty in surface transport provided by the Corporation or its nominated agents and was by its very nature, receivable by his legal heirs. Although no specific rule was pointed out to us it was also stated that the deceased had power of disposition over it in the sense that he could nominate the person or persons by whom the amount was recoverable after his death, and that the deceased had actually nominated his wife for that purpose. Learned counsel thereforee contended that the right to get compensation as a condition of ones service is as much an interest in property as any other interest which a person may have in incorporeal property, such as choses in action etc. The circumstance that the occasion for the exercise of that right arises after the death of that person and is also conditional upon death, does nto in any way detract from the existence of that right and the deceased's interest therein during his life-time. The payment of compensation is nto gratuitous nor does it depend upon the discretion of the Corporation It is a compulsory payment which the Corporation is bound to make on the happening of a certain event to the heirs of the deceased. There is thus a direct nexus between the right of the deceased as an essential condition of his service to have that compensation paid to his legal representatives and the right of his legal representatives to receive that payment. This right of the deceased must be regarded as interest in the property in much the same way as he would have had in any actionable claim of which the payment was postponed until after his death. In as much as the deceased had also the right to nominate the person to whom the payment should be made. be had also the power of disposition over it. In support of his argument the learned counsel for the Revenue referred us to a decision of the Court of Appeal in England in Attorney General vs. Quixley (10) The question raised in that case was whether the estate of Margaret Louise Quixley. a teacher, was subject to estate duty in respect of a death gratuity payable to her legal representatives by the Board of Education under the provisions of the Teachers (Superannuation) Act, 1925. The lady was a school teacher who was ultimately at the time of her death interested in a sum which was called a death gratuity. She had been a teacher for some years. By the School Teachers (Superannuation) Act of 1918, a system was established for the profession: with respect to the grant of Superannuation allowances and gratutities to their legal personal representatives. Section 6 of the Act however declared that 'nothing in this Act shall give any person an absolute right to any superannuation allowance or gratuity, and, except as in this Act provided, the decision of the Board on any question which may arise as to, or which may affect the application of this Act to any person ....shall be final. There was another Act of 1922 which made contributions compulsory. In 1925 there came another Act, the Tecachers (Superannuation) Act. By section 5(1) it was declared: 'Subject to the provisions of this Act, the Board of Education shall grant to the legal personal representatives of a teacher who has been employed.... and who dies while in contributory service. . . . . . a sum nto exceeding an amount equal to the amount of the additional allowance which the Board might have granted to him if he had at the date of his death become permanently incapable of serving effciently as a teacher in contributory service, whichever is greater.

(18) The lady made the required contributions and also fulfillled the other conditions on which the payments of the gratuity to her personal representatives depended.

(19) Rowlatt J. held that although the quantum of the gratuity was nto ascertainable until death, the gratuity was property passing at the death of the deceased, of which she was competent to dispose, within the meaning of the Finance Act, 1894, and so subject to duty.

(20) Miss Quixley's administratix appealed. One of the questions posed before the Court or Appeal was: Is there a right which the lady had in the graturity within the term 'property'

LORDHansworth M.R. answered the question thus : ''BUTfirst of all, if the interest that she had falls within the term 'property', we can leave outside, for the monment, the other matters brought into consideration in the argument. Now it appears to me that from and after the 1925 Act came into operation, whereby it was laid down that the Board shall make a grant to the legel personal representatives of a teacher, that interest was nto only an interest in an uncertain amount, but was a right which was within the term 'property'.

(21) The next question posed by the learned Master of the Rolls was: Is that right a piece of property under the section To this right a piece of property under the section? To this his Lordship gave the following answer :

'IN my view it is, and, being such it prima-facie comes within the enlarging words in section 2, sub-section 1 (a) of the Finance Act, 1894. Be it observed that what we have to do is nto to take the ordinary meaning of words, but we have to interpret 'shall be deemed.' thereforee, what might nto at once appear to be rightly called 'property passing on the death' is still to be property passing on the death, and as such includes property of which the deceased was at the time of his death competent to dispose. It was, in my judgment, property.' And then went on to add:-

'COUNSELwas, I think rightly, compelled to admit that she could dispose of a sum ultimately to be received, or could dispose of this interest by her will, athough he said she could nto raise any money upon it in the sense that there could nto be an assignment of it while she was alive. But it would appear to me that to suggest that the deceased lady had no power to dispose of the sum by will would be to take away half the merit of the gratuity upon her deceased. If and when it is received it must be subject to her will' and absolute right to receive some sum is of benefit and of comfort to her, because she is, by means of that knowledge and that competence to dispose of it, able to make some provision for those who are the objects, and rightly the objects, of her disposing power, ]t appears to me, thereforee, that in view of the right which this lady had, she bad this power to dispose of the sum by will and, thus, when one looks at the Act of 1894, section I, the charging section, and section 2, which I have referred to as a section which sweeps into the charge under section I property which is to be deemed for the purpose of section I to be property passing in the death, and when one looks, at the still wider interpretation under section 22, sub section 2 (a), it is clear that this sum that is ultimately received, 429 17s. 6d. does fall within the charge imposed by section 1 of the Finance Act, 1894.' LAWRENCEL.J. put the proposition in these words :- 'SECTIONI of the Finance Act, 1894, imposes estate duty upon all property which passes on the death. In order that the estate duty may be payable under that section the property must have a continuous existence before and after the death, and the possession or enjoyment of the property must pass from one person to another on the death. Section 2 deals with property which does nto in fact pass on the death, and enacts that, for the purposes of liability to estate duty, that property shall be deemed to pass. In order that estate duty may be payable in respect of property under that section, it is nto necessary that there should have been a continuous existence of that property, nor is it necessary that it should pass from one person to another on the death. It would include property which comes into existence for the first time on the death of a person. Amongst the property which is so deemed to pass under section 2 is 'property of which the deceased was at the time of his death competent to dispose'-see sub-section l(a) of section 2. The words 'competent to dispose' are further defined by section 22, sub-section 2(a) which enacts, so far as material for this case, that a person shall be deemed competent to dispose of property if he has such an interest therein or such general power as would enable him to dispose of the properly. and the expression 'general power' to dispose of the 'property is further defined in the second part of the same sub-section, and it 'includes every power or authority enabling the donee or other holder thereof to appoint or dispose of property as he thinks fit, whether exercisable by instrument inter-vivos or by will.'

'NOWthe sole question arising in this case is whether the death gratuity payable to the deceased was property of which the deceased was, at the time of her death, competent to dispose within the meaning of section 2, sub-section l(a) and section 22, sub-section 2(a) of the Finance Act, 1894. Counsel for the appellant has admitted, and I think, rightly admitted, that the deceased was competent to dispose of this property by will as she might think fit. It seems to me that that admission carries the contention of the Crown the whole length.'

(22) I have already said that the provisions of sections I and 2(1) of the U. K. Finance Act correspond to section 5 and 6 of the Indian Act. In Quixley's case, the learned judges also referred to section 22(2)(a) of the Finance Act which reads as follows:-

'Aperson shall be deemed competent to dispose of property it he has such an estate or interest therein or such general power as would.if he were sui Jurisdiction, enable him to dispose of the property, ...and the expression''general power' includes every power or authority enabling the donee or other holder thereof to appoint or dispose of property as he thinks fit, whether exercisable by instrument inter-vivos or by will.'

(23) The provision corresponding to that section in the Indian Act is contained in section 3(1)(a) which almost reproduces the language of the English Statute.

(24) It is true that in the instant case the deceased was nto required to make any contribution for the purpose of earning the compensation as Miss Quixley was required to make under the Teachers (Superannuation) Act, but the compensation was payable as a reward for the services which the deceased was required to render and was a part of the remuneration payable under the Service Rules and the Pilto agreement and its object was to make some sort of provision for the legal representatives of the deceased employee. He thereforee had interest in it and had also the right to appoint the person to whom it should be paid on his death. Although no specific rule providing for such appointment has been pointed out, the fact that he did nominate his wife as the person to whom the compensation should be paid and the Corporation accepted the nomination, goes to show that his authority to do was recognized. Learned counsel for the 'Accountable person' countered the argument advanced on behalf of the Revenue by submitting that the compensation in question is, in no way different, from death compensation under the workmen's compensation schemes etc. which are generally nto dutiable, the deceased having never paid for them nor having held them as his property at any time. So also are damages paid for deaths on account of accidents. He said there was a difference between compensation payable on account of damages suffered by the estate of the deceased as a result of injuries caused to him and the benefit that accrued to his legal representatives after his death and was occasioned by it. It was argued that in one case the deceased had an interest in compensation amount which be could dispose of during his life time while in the other case he had no such interest nor had he any right of disposition over it as the benefit itself occurred after he ceased to be there to see to its disposition.

(25) In this connection the learned counsel cited a Bench decision' of Lahore High Court in Secretary of State v. Gokal Chand and others (11) where in the context of sections 1 and 2 of the Fatel Accidents Act Xiii of 1885 which is primarily intended to give the legal represe ntativesof a person whose death has been caused by the wrongful act, neglect or default of another person a right to recover compensation from the latter for the pecuniary loss resulting from the death to the deceased's children or other relatives enumerated in the Act or to the estate of the deceased. Sir Shadi Lal C.J. who spoke for the Bench said: 'The law contemplates two sorts of damages: the one is the pecuniary loss to the estate of the deceased resulting from the accident; the other is the pecuniary loss sustained by the members of his family through his death. The action for the latter is brought by the legal representatives, nto for the estate, but as trustees for the relatives beneficially entitled; while the damages for the loss caused to the estate and, when recovered, form part of the assets of the estate. The loss to estate had accrued during the lifetime of the deceased and could have been recovered by him'

(26) The above case was approvingly referred to by a Division Bench of Madras High Court (Rajamannar C.J. and Venka- tarama Ayyer J.) in Gobald Motor Service Ltd., a company registered under the India Companies Act, by its Managing Directors N. Veeraswami Chettiar and another V. R.M.K.Velusami and others (12) where the learned judges also referred to the following

'THErights of action in the two case are quite distinct and independent. Under the Law Reforms (Miscellaneous Provisions) Act, 1934, the right of action is for the benefit of the deceased's estate; under the Fatal Accidents Act the right of action is for the benefit of the deceased's deperddents.'

(27) Learned counsel next argued that so far as the dependents of the deceased were concerned their right to receive compensation was a mere expectancy which was nto transferable under section 6(a) of the Transfer of Property Act, 1882, and cited in this connection a judgment of the Privy Council in Ananda Mohun Roy V. Gour Mohan Mullick (13) and of Madras High Court in Palanatti Raghudu and another V. Nallagudda Erraiva and another (14) I do nto think section 6(a) T.P. Act, has any bearing on the question arising for decision in this case as we are nto concerned in any way with the rights of the dependents to transfer or dispose of their right of expectancy in this case. For the purpose of decision of this case what is material is the right of the deceased to dispose of by will or otherwise the compensation which his dependents or legal representatives .are entitled to receive.

(28) I also do nto think much of the distinction which the learned counsel endeavored to draw between the pecuniary damages turn the loss caused to the estate and the pecuniary loss sustained by the inembers of his family through his death. The distinction may have some relevance and I dare-say it does have some relevance when one has to consider the question of damages as was the case in Feay v. Bai-nwell (15) decided by Singleton J. but it does nto seem to have any relevance for the purpose of deciding whether the compensation paybable in the present case is property which should 'be deemed to pass on the death of the deceased.'

(29) Learned counsel lastly contended that a mere power of nomination for which there does nto seem to be any specific provision in the relevant Rules or agreement, cannto be regarded as a power of disposition. He also doubted whether the power to nominate comes within the expression 'Competent to dispose of. In this connection our attention was invited to a decision of Madras High Court in D. Molianayelu Mudaliar and another V. Indian Insurance and Banking Corporation Ltd. Salem and (mother (16) where the effect of nomination under section 39 of the Insurance Act 1938 with reference to a policy of life insurance was considered. It was there said :

'SOfar as nomination is concerned there is no appreciable difference between the English and American law on the one hand, and what obtains in India. According to the English law the payee or the nominee is nothing more than an agent to receive the money, which money remains as the property of the assured and at his disposal during his life time and on his death forms part of the estate. The result is that the payee or the nominee takes no beneficial interest in it.'

(30) The above passage however does nto contain the full statement of law on the subject because after referring to a large number of cases, Govinda Menon J. added :

'THEREis an exception to the above rule. I n case of nomination of a wife as the payee under a policy of life insurance. if the construction placed upon the declaration is that a trust has been created under the provisions of the Married Women's Property Act, the beneficiary takes the assured amount free of all the liabilities of the insured and if it is construed as a mere nomination, the nominee has no more right than to receive the amount subject to all the liabilities as if the disposition was by means of a testamentary instrument.'

(31) It is, however, nto necessary to discuss at length the legal effect of nomination in this case because the nomination of his wife by the deceased was recognized by the Corporation and the payment of compensation has actually been made to her without any one else having raised any claim thereto.

(32) On a close and careful consideration of the whole matter. I am inclined to take the view that the present case comes within the ratio of the decision of the Court of Appeal in England in Quixley's case. I would thereforee answer the question in the affirmative. The Controller will also have his costs which are assessed at Rs. 300.00.


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