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Commissioner of Wealth-tax, Gujarat I Vs. Bhogilal Maganlal Shah - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtGujarat High Court
Decided On
Case NumberWealth-tax Reference No. 1 of 1966
Judge
Reported in[1968]69ITR288(Guj)
ActsWealth Tax Act, 1957 - Sections 2; Transfer of Property Act, 1882 - Sections 6
AppellantCommissioner of Wealth-tax, Gujarat I
RespondentBhogilal Maganlal Shah
Appellant AdvocateJ.M. Thakore (Advocate General)
Respondent Advocate I.M. Nanavati, Adv.
Cases ReferredPhipps v. Ackers
Excerpt:
direct taxation - assessment - section 2 of wealth tax act, 1957 and section 6 of transfer of property act, 1882 - assessee's wife created trust deed creating certain interest in favour of assessee - whether assessee taxable on interest created in trust deed - wealth tax officer took view on construction of clauses contained in deed vested interest was created in favour of assessee - tribunal on examination of trust deed concluded that interest created in trust deed contingent nature - assessee had mere chance of obtaining property on certain contingency - interest not assessable. - - the corpus with all the accretions thereto to be used, enjoyed and disposed of by him, the said sheth bhogilal maganlal shah as he likes at his own sweet will. , the corpus with all the accretions.....1. this reference arises out of an assessment to wealth-tax made on the assessee for the assessment years 1957-58 to 1962-63, the relevant valuation dates being 31st march of each of the years 1957 to 1962. the reference involves the question of constriction of a trust deed dated 8th october, 1945, made by the assessee's wife, chanchalbai, hereinafter referred to as value of rs. 1,75,000 and a fixed deposit of rs. 25,000 on the trust set out in clause 1, 2 and 3 of the trust deed. these clauses ran, inter alia, as under : 'the trustees shall out of the income of the trust property pay in the first instance all costs, charges, and expenses incurred by the in or about the recovery of such income and all other costs, charges and expenses incurred by them and properly payable out of the said.....
Judgment:

1. This reference arises out of an assessment to wealth-tax made on the assessee for the assessment years 1957-58 to 1962-63, the relevant valuation dates being 31st March of each of the years 1957 to 1962. The reference involves the question of constriction of a trust deed dated 8th October, 1945, made by the assessee's wife, Chanchalbai, hereinafter referred to as value of Rs. 1,75,000 and a fixed deposit of Rs. 25,000 on the trust set out in clause 1, 2 and 3 of the trust deed. These clauses ran, inter alia, as under :

'The trustees shall out of the income of the trust property pay in the first instance all costs, charges, and expenses incurred by the in or about the recovery of such income and all other costs, charges and expenses incurred by them and properly payable out of the said income and shall pay the balance of the said income to the said Chanchalbai, the settlor during her life until her death, and on the death of the settlor, leaving surviving her, her husband, the said Sheth Bhogilal Maganlal Shah, the trust, property shall vest in him and the trusses pay out and hand over to him the said Sheth Bhogilal Maganlal Shah, the entire trusts property, i.e. the corpus with all the accretions thereto to be used, enjoyed and disposed of by him, the said Sheth Bhogilal Maganlal Shah as he likes at his own sweet will.

2. If the said Sheth Bhogilal Maganlal Shah predecease the settlor and her son Ramniklal Bhogilal Shah survives the said Bai Chanchalbai, the entire trust property shall on the death of the settlor vest in the said Ramniklal Bhogilal Shah and the trustees shall pay out and hand over to him the entire trust property, i.e., the corpus with all the accretions thereto to be used enjoyed and disposed of by him, the said Sheth Ramniklal Bhogilal Shah as he likes at his own sweet will.

3. In case neither the said Sheth Bhogilal Maganlal Shah nor the said Ramniklal Bhogilal Shah survives the said Bai Chanchalbai, but a lineal descendant or descendants of the said Ramniklal Bhogilal Shah survives the said Bai Chanchalbai, the trusted shall hold the trusts property, i.e. the entire corps together with the accretions thereto upon the trust following that is to say :'.

2. Then followed in the contingency set out in clause 3, dispositions in favour of the lineal descendants of Ramniklal but these dispositions are not material for the purpose of the present reference and it is, therefore, not necessary to make any reference to them in detail.

3. In the course of the assessment of the assessee to wealth-tax for the assessment years 1957-58 to 1962-63, a question arose whether the assessee was taxable on his interest under the trust deed. The Wealth-tax Officer took the view on a construction of clauses 1 and 2 of the trust deed that under the trust deed the assessee had a vest interest in he corpus and he accordingly proceeded to determine its value on the relevant valuation dates on the basis of its being a vested interest and included it in the net wealth of the assessee. The assessee being aggrieved by the orders made by the Wealth-tax Officer, preferred appeals to the Appellate Assistant Commissioner, there being a separate appeal in respect of each assessment year. The Appellate Assistant Commissioner disagreed with the view taken by the Wealth-tax Officer and held that the assessee did not have any interest, vested or contingent, in the corpus but what he had was merely a chance or possibility of obtaining an interest and that was not an 'asset' within the meaning of section 2(e) so as to be includible in the net wealth of the assessee. The Appellate Assistant Commissioner accordingly reduced the net wealth of a assessee by deducting the value of the assessee's interest under the trust deed which had been included by the Wealth-tax officer. This led to the filing of peoples by the Wealth-tax officer before the Tribunal. The Tribunal, on an examination of the provision of the trust deed, came to the conclusion that the interest of the assessee in the corpus was neither a vested interest nor a contingent interest, but it was merely a spes successionis - a chance of obtaining the property which was in the nature of a mere possibility of getting something on a future date and was, therefore, incapable of alienation by virtue of section 6(a) of the Transfer of Property Act. This being in the opinion of the Tribunal the true nature and character of the interest of the assessee in regard of the corpus, the Tribunal held that the interest was such as could not be sold and no price could be realised for it and the value of the interest was accordingly nil. The revenue thereupon applied for a reference and on the application the Tribunal drew up a statement of the case referred the following question for the opinion of the court :

'Whether, on the facts and in the circumstances of the case, did the assessee acquire any interest under the deed of settlement dated October 8, 1945, executed by his wife, Smt. Chanchalbai Bhogilal such which could be considered on the relevant valuation dates, as an asset within the meaning of section 2(e) of the Wealth-tax Act ?'

4. The question unfortunately is not happily worded and does not bring out the whole of the controversy between the parties. It takes into account only one aspect of the controversy, namely, whether the assessee had merely a spes successionis under the trust deed or he had an interest in the corpus which could be regarded as an 'asset' within the meaning of section 2(e). It does not comprehend the further aspect, namely, that if the view taken by the Tribunal is found to be wrong and it is held that what the assessee had under the trust deed was not a mere spes successionis but an interest in the corpus, whether such intent was a vested interest or a contingent interest. That was certainly a point of dispute between the assessee the revenue and was agitated before the Tribunal. The Tribunal of course took the view that the assessee had neither a vested interest nor a contingent interest and it was merely a spes successionis which he had under the trust deed, but if this view were found incorrect, it would clearly be necessary to decide whether the interest of the assessee in the corpus was a vested interest or contingent interest. It is, therefore, necessary to refarme the question to take in this aspect of the controversy as well and this can best be done by farming two question interest of one, the question framed by the Tribunal being numbered question no. 1 and the second question being as under :

'(2) If the answer to the first question is in the affirmative, whether such interest and was a vested interest or a contingent interest ?'

These two question between themselves bring out the whole contrives between the parities in regard to the true nature and quality of interest of the assessee in the corpus.

5. Now, before we proceed to examine the nature and quality of the interest of the assessee in the corpus, it is necessary first to clear the ground by pointing out that in any event it cannot be regarded as a spes successionis. Even if the construction placed by the Tribunal on the relevant provision of the trust deed is right and the gift of the corpus of to the assessee is held to be continent on his surviving interest and not a spes successionis. A spes successionis is a bare or naked possibility such as the chance of a relation obtaining a legacy on the death of a kinsman or and other possibility of a like nature which must be distinguished from a possibility coupled with interest. Where interest in corpus is given to a done under a settlement and such interest in contingent on the happening of happening and event the done acquires a contingent interest in the in the corpus which become vested on the happening of the uncertain even and such contingent interest, though dependent on a possibility for its vesting, is very much different from a spes successionis. It is a form of property which is assemble or transferable and on which money can be raised unlike spes successionis which is non-transferable by reasons of section 6(a) of the Transfer of Property Act. This distinction between the two legal concepts is clear and well-defined and does not need any authority to support it. But if any authority were needed, it is to to be found in the decisions of the Privy Council in Ma Yait v. Official Assignee. In that case too the gift to the children was contingent on the youngest attaining the age of 20 and the argument was that the interest of the children being in the of nature of spes successionis not transferable and the assignment of such interest was therefore invalid. The Privy Council repelled this argument holding that the interest which the children took in the corpus was contingents interest which,

'..... was something quite different from a mere possibility of a like nature of an heir-apparent succeeding to the estate, or the chance of relation obtaining a legacy......'

The Privy Council observed that a contingent interest is,

'.....a well ascertained form of property - it certainly has been transferred in this country for generations - in respent of which it is quite possible to raise money and to dispose of it in any way that the beneficiary chooses.'

6. See also the decision of a Division Bench of this court in Commissioner of Wealth-tax v. Ashokkumar Ramanlal.

7. It is, therefore, clear that even if the gift to the assess be held to be contingent on his surviving the settler, the interest of the assessee in the corpus cannot be regarded as spes successionis and hence non-transferable under section 6(a) of the Transfer of Property Act and must be held to be an 'asset' within the meaning of section 2(e). The first question submitted for our opinion must, therefore, be answered against the assessee.

8. The question then arises whether the gift to the assessee is contingent on his surviving the settlor or it is vested in interest in the assessee possession or enjoyment alone being postponed. What is the nature and quality of the interest of the assessee in the corpus It is a vested interest or a contingent interest The decision of this question depends on a true interpretation of the provisions of the trust deed. now in cases of this kind where the question is as to whether an interest granted under a settlement or will is vested or cotangent, there are two rules which must always be born in mind and the learned Advocate-General appearing on behalf of the revenue strongly urged upon us not to ignore them. The first rule which is a well-established real for the guidance of the courts in consturing a settlement to will is that the interest must ordinarily be held to be vested unless the condition precedent to the vesting is expressed with reasonable clearness : see Bickersteth v. Shanu, which was a case relating to devise of real estate but the rule applies equally to disposition of what is known in the English law as personalty. The rule is that the court must always learn in favour of vesting. As observed by the Supreme Court in Rajes Kanta Ray v. Shanti Debi :

'.......a court has to approach the task of construction in such cases with a bias in favour of a vested interest unless the intention to the contrary is definite and clear'. Another rule of equal cogency is that in all these cases the question must be regarded primarily as 'one of intention to be gathered from a comprehensive view of all the terms of a document'.

9. These two rules must be born in mind in approaching the question of construction of the relevant clauses of the trust deed.

10. Turning to the trust deed it is clear that the provisions which effects the gift of the corpus to the assessee is clause 1. This clause gives the income of the corpus to the settlor for her life and then proceeds to say that,

'on the death of the settlor, leaving surviving her, her husband, the said Sheth Bhogilal Maganlal Shah, the trust property, shall vest in him and the trustees shall pay and hand over to him the said Sheth Bhogilal Maganlal Shah, the entire trust property.'

11. There are two provisions made in this clause : one is in regard to the vesting of the trust property and the other is in regard to the distribution or handing over of the trust property. Both the vesting and the distribution are directed to take place at the same time namely on the happening of the event specified by the words 'on the death of the settlor, leaving surviving her, her husband, the said Sheth Bhogilal Maganlal Shah.' Now this, event namely, the death of the settlor leaving her surviving the assessee is clearly an uncertain event. The death of the settlor would undoubtedly be a certain even but whether the assessee would be living or not at the date of the death of the settlor would be an uncertain event. The vesting of the trust property in the assessee is not directed to take place on the death of the settlor simpliciter. If that were so, the interest in the corpus would be vested interest from the date of the execution of the trust deed by virtue of the rule enacted in section 19 of the Transfer of property Act which says that where on a transfer of property, an interest therein is serrated in favour of a person without specifiying the item when it is to take effect or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen such interest is vested, unless a contrary intention appears from the terms of the transfer. But there is a further event which must happen before the trust property can vest in the assessee and that event is that on the death of the settlor leaving her surviving the assessee that the trust vest in the assessee and the vesting of the trust property in the assessee is, therefore, dependent on the happening of the uncertain event of the assessee surviving the settlor. The clause must, therefore, be construed as creating a contingent interest in the corpus in the assessee. Such consequence followed inevitably from the application of the rule enacted in section 21 of the Transfer of Property Act. The revenue contended that the words 'on the death of the settlor leaving surviving her, her husband......' were not words of contingency governing the vesting of the trust property in the assessee but they had reference only to the distribution of the trust property and the vesting of the trust property in the assessee was, therefore, immediate and the period of distribution alone was postponed. But this contention fails to given due effect of the language employed by the settlor. The words 'on the death of the settlor leaving surviving her, her husband' read in the context of the words 'on the death of the settlor' introduce a contingency, namely, that the assessee must alive at the date of the death of the settlor and this contingency on a plain natural construction of the clause governs not only the distribution but also the vesting of the trust property. Moreover, the language used by the settlor shows clearly and indubitably that he was aware of the distinction between vesting and distribution for been has specifically referred to the both the concepts and made provision in regard to both and it is, therefore, not possible to explain away the words 'the trust property shall vest in him' by saying that they were intended merely to refer to distribution of the trust property. It is undoubtedly true as pointed out by us above, that in construing a settlement of will, the court must always lean in viva of vesting but this rule does not apply where the condition precedent etc the vesting is pressed with risible clearness. Hare we find that on plain grammatical constriction of the words used by the settlor it is clear that the vesting of the trust property in the assessee is subject to the condition precedent that the assessee must be alive at the date of the death of the settlor and the interest given to the assessee in the corpus is, therefore, a contingent interest and not a vetted interest.

12. This would clearly appear to be the correct position on a reading of clause 1 but as pointed out by the Supreme Court in Rajes Kanta Roy's case, the intention of the settlor is to be collected from the settlement as a whole and on one clause should be construed in isolation, for the intention of the author of the settlement is to be found not in one part of the settlement or in the other but in the entire settlement and that intention can best gathered by viewing a particular part of the settlement not detached from its contest in the settlement but in connection with its whole context. We must, therefore, see whether there is anything in the other parts of the trust deed which shown that the gift of the corpus though clearly contingent if clause 1 were to be read alone, was really intended at to crated a vested interest. When we turn to the other clauses of the turn deed we find that, far from showing that the gift of the corpus to the assessee was intended to created a vested interest, they emphasise that the interest in the corpus given to the assessee was contingent interest and not a vested interest Clause 2 provides that if the assessee pre-deceases the settlor and Ramniklal survives the settlor, entire trust property shall on the death of the settlor vest in Ramniklal and the trustees shall pay out and hand over to him the entire trust property. The trust property under this clause is to vest in Ramniklal on the fulfillment of a double contingency, namely, that the assessee produces the settlor and Ramniklal survives her. It is not enough that the assessee predecease the settlor. The trust property does not vest in Ramniklal on the death of the assessee during the lifetime of the settlor. The clause clearly and explicitly provides that the trust property shall vest in Ramniklal only if the assessee dies during the life time of the settlor and Ramniklal under this clause is, therefore, contingent on the assessee predeceasing the settlor and Ramniklal being alive at the date of the death of the death of the settlor. If at the date of the death of the settlor the assessee is dead but Ramniklal is alive, the trust property is to vest in Ramniklal. But what is to happen if at the date of the death of the settlor neither the assessee nor Ramniklal is alive In whom is the property then to vest This contingency is dealt with in clause 3 which makes certain dispositions in case neither the assessee nor Ramniklal is alive at the date of death of the settlor but a lineal descendant or descendants of Ramniklal survive the settlor. If at the date of the death of the settlor neither the assessee nor Ramniklal is alive but lineal descendants of Ramniklal are living, the trust property is to be dividend amongst them in certain proportion. Reading clauses 1, 2 and 3 together, the scheme of the trust deed, therefore, clearly appears to be that the settlor should have the income of the trust property during her lifetime and on her death the trust property should vest in the assessee if he is then alive but if he dies during the lifetime of the settlor, the trust property should in Ramniklal and if Ramniklal is also not then alive, the trust property should go to the lineal descendants of Ramniklal provided again they are alive at the date of the death of the settlor. In each of the three clauses we find that the vesting of the trust property is made contingent on the done being alive at the date of the death of the settlor. The point of time at which the vesting in each of the three clauses is contemplated to take place is the date of death of the settlor with a superadded contingency and reading the trust deed as a whole, it is, therefore, clear that the interest in the corpus given to the assessee under clause 1 was contingent interest and not a vest interest.

13. But the revenue sought to escape this conclusion by relying on the rule well-established in English law and commonly referred to as the rule in Phipps v. Ackers. This rule was first laid down in Edwards v. Hammond but it is commonly known as the rule in Phipps v. Ackers as it received its precise formulation for the first time in this case decided by the House of Lords. The rule is stated in this way :

'If real estate be devised to A, 'if' or 'when' he shall attain a given age, with a limitation over in the event of his dying under that age, the attainment of the given age is held to be a condition subsequent and not precedent, and A takes an immediate vested estate, subject to be divested upon his death under the specified age. And if the divested upon his death under the specified age. And if the devise be to A, if or when he shall attain a given age, with a limitation over upon his death under that age without issue, A takes a vested estate, defeasible only in the event of his death without issue under the specified age.'

14. This rule was first applied in a case of gift of realty but it was sub-sequently extended to a case of gift of both personalty and realty and Farewell J. in Public Trustee v. Heath held it to be applicable also in a case of gift of pure personality. The learned judge held that this rule was a rule of construction and if it was applicable in a case where the gift is a gift of realty or a gift of both personalty and realty, there is no reason why it should not be held applicable in a case where the gift is only of personality. Founding himself on these observations of the learned judge, the learned Advocate-General contended that since this rule was a rule of construction not based on any peculiarity of the English law, there was no reason why it should not be imported in the construction of settlement or wills in India and if this rule was applied in the present case, the interest in the corpus given to the assessee would clearly be a vested interest since the trust property was given to the assessee if he survived the settlor with a gift over in favour of Ramniklal in the event of the assessee dying during the life time of the settlor. This contention, though at first blush attractive, is in out opinion not well-founded and there are three very good reasons why we must reject it.

15. Even in England where this rule is applied, it is merely a rule of construction found on the principle of assumed intention of the settlor and it must, therefore, yield where the intention of the settlor is manifest from the words used in the trust deed. Like all rules of construction, the operation of this rule is presumptive and not peremptory and, therefore, where the words used by the settlor are clear and unambiguous, there can be no scope for invoking the rule. The language and the context of the provision to be construed must never be lost sight of : to ignore the language and the context would be to make the intention of the settlor subordinate to the rule. The rule instead of subserving the cause of interpretation of the intention of the settlor would become the master of it. Being merely an aid to ascertain the intention of the settlor and the ultimate object being really to ascertain such intention, the rule should not be regarded as one of compulsory application and if the intention of the settlor is otherwise clear and manifest, effect should be given to such intention despite the rule. This was done in Doe d, Planner v. Scudamore. There was in this case a devise to G.L., the testator's heir at law for life, and from and after his death to C.B., her heirs and assigns in case she shall survive and outlive the said G.L. but not otherwise, and in case she shall die in the lifetime of the said G.L. then to G.L., his heirs and assigns for ever. The question was weather the devise to C.B. was a vested remainder or a contingent remainder. Heath J. said :

'In this case it is clear that the event is to happen before the estate can vest : for the brother is to die before C. Benger can be entitled to the estate, the words being, in the case the said C. Benger shall survive and outlive my said brother and not otherwise.

16. The words used by the testator made it abundantly clear that the vesting of the estate in C.B. was subject to a conditions precedent, namely that C.B. should survive and outlive G.L. Where therefore for intention of the settlor is clear and unambiguous that the done should have a contingent and not a vested interest, the intention must prevail and the rule must give way. Here, as we have already pointed out, it is clear on reading the trust deed as a whole that the intention of the settlor was to give to the assessee a contingent interest in the corpus-contingent on his surviving the settlor and the rule cannot be applied as to defeat the manifest intention of the settlor.

17. We also do not see any reason why this rule, though undoubtedly a rule of construction, should be imported in the of settlements or wills in India. There is danger in lifting bodily into out law highly technical and over-refined rules of English law owing their origin to the peculiarity of the development of the law of property and adopting them as riders to the actual statutory language of our sections by treating them as if they were doctrines of universal application. The historical evolution of the rule invoked on behalf of the revenue shows that it was established in England with a view to preventing a gift in remainder being liable to destruction as contingent remainder by reason of not being supported by a prior legal estate before it fell into possession. Now, admittedly the rule of English law that a contingent remainder must be supported by a prior legal estate is not imported in India and therefore, the rule of construction evolved in England in order to remedy the mischief arising out of that rule need not be imported in this country. It is significant to note that in Phipps v. Ackers two rules of construction were laid down by the English court, namely, (i) that the gift of the income of the income of the same fund, until the contingency happens, to the very persons who will on attaining particular age, take the fund makes the gift of the fund, apparently contingent upon the attainment of that age, a vest interest, and (2) that a gift-over upon failure of a prior gift may have the effect of converting the prior gift apparently contingent upon attainment of a particle age into a vested interest subject to be divested on death before that age. Of these two rules the first has been adopted in India by the exception to section 21 of the Transfer of Property Act and the exception to section 120 of the Succession Act. But the second rule which is the rule relied upon on behalf of the revenue has not been adopted in any section of the Transfer of Property Act or the Indian Succession Act. Not only we do not find any sanction for this rule in any provision of the Transfer of Property Act or the Indian Succession Act but illustration (iii) to section 120 of the Indian Succession Act in terms negatives the applicability of this rule. That illustration runs as under :

'(iii) An estate is bequeathed to A for life, and after his death to B if B shall then be living; but if B shall not then be living to C.A, B and C survive the testator. B and C each take a contingent interest in the estate until the event which is to vest it in one or in the has happened.

18. The facts of this illustration are taken from Finch v. Lane. The testator in that case by a will gave real and personal estate to M.H., her heirs, executors, administrators, and assigns absolutely, if she should be living at the death of the testator's wife without leaving issue her surviving, then there was a gift-over to certain other persons. The English court applied the rule in Phipps v. Ackers and held that M.H. took an absolute interest, liable to be divested only in the event of her death in the lifetime of the testator's widow without leaving issue. If the rule in Phipps v. Ackers were applicable in India, B in illustration (iii) would also have taken an absolute interest liable to be divested in the event of his death during the lifetime of A just as M.H. did in Finch v. Lane. But, according to illustration (iii), B takes a contingent interest in the estate until the event which is to vest it in him has happened. The applicability of the rule in Phipps v. Ackers, cannot, therefore, be imported in the construction of settlements or wills in India. We may also point out that in Kanailal Ghoshal v. Kumar Purnendu Nath Tagore, S.R. Das J., as he then was, also refused to import this rule of construction of Indian settlements and wills. Speaking about this rule of construction he said :

'Further this rule of construction namely, the gift-over modifying the prior gift, has not been adopted by the Transfer of Property Act, or the Indian Succession Act, while those Acts have adopted the other rule of construction in the exception to which I have referred. I think it is safe to s confine myself to the Transfer of Property Act. I do not find that the Transfer of Property Act or the Succession Act has adopted the second rule of construction referred to above and I do not see why I should import them.'

19. The revenue is, therefore, not entitled to relay on this rule of construction for the purpose of converting what is, to all intents and purposes, a contingent interest into a vested interest.

20. But even if this rule were applicable in the construction of Indian settlements and wills, we do not think it helps the revenue to successfully contend that the interest in the corpus given to the assessee was a vested interest. There is no difficulty in the application of the rule where the prior gift is subject to one contingency and the gift-over is to take effect on the failure of that very contingency, e.g., when the gift is to A for when he shall attain 21' and in case he dies before that age then to B. But difficulty arises where the gift-over does not fit in with the original gift, as where the original gift is subject to one contingency and the gift-over is to take effect on another contingency. Where such is the case the rule cannot have application. It is essential to the applicability of the rule that the contingency on which the gift-over is to take effect must be a contingency having relation to the interest under the prior gift. It is stated in Halsbury's Laws of England, third edition, volume 39, page 1128, paragraph 1665 :

'The rule does not apply where the gift over is contingent on an event which cannot happen until after the death of the first taker, or has no relation to the first taker's interest.'

21. The contingency on which the gift-over is to take effect must not be unconnected or unrelated to the prior gift. If it is unconnected or unrelated to the prior gift, the rule would have no application : vide Price. v. Hall. The present case belongs to this category for we find that the prior gift to the assessee is contingent only upon the assessee surviving the settlor while the gift-over is contingent not only upon the assessee dying during the lifetime of the settlor but there is also an additional contingency, namely, that Ramniklal should be alive at the date of death of the settlor. Different contingencies are, therefore, attached to the prior gift and the gift over and the gift-over does not fit in with the prior gift. The rule in Phipps v. Ackers cannot, therefore, apply to the facts of the present case even if this rule were otherwise applicable in the construction of Indian settlements and wills. We must, therefore, reach the conclusion that the interest of the assessee in the corpus under the trust deed was a contingent interest and not a vested interest.

22. Our answer to the question reframed by us, therefore are : Question No. 1 : In the affirmative; and Question No. 2 : The assessee had contingent interest and not vested interest in the corpus. There will be no order as to costs of the reference.


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