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Chinnam Rajamannar and anr. Vs. Tadikonda Ramachendra Rao and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported in(1906)ILR29Mad155
AppellantChinnam Rajamannar and anr.
RespondentTadikonda Ramachendra Rao and anr.
Cases ReferredMullins v. Smith
Excerpt:
.....of to resort to general assets. - - the contention on behalf of the defendants is that they are payable only out of profits realised up to the time the first defendant attained his 20th year (such profits being exclusive of interest received as such upon the capital employed in the business and also exclusive of the dividends of certain mill shares held by the partners as well as the income of the immoveable property held by them jointly. 5. the next point is whether the plaintiffs are entitled to be paid out of the general assets of the testator in the event of the failure of the source from which they were directed to be paid by the testator, no doubt, in the case of demonstrative legacies, the legatee is entitled to resort to the general assets on failure of the source intended,..........other than the three expressly excluded in the above passage, were payable from the entire income of profits derived from the estate held jointly by the testator and his partner yenkannagaru, moveable or immoveable. the contention on behalf of the defendants is that they are payable only out of profits realised up to the time the first defendant attained his 20th year (such profits being exclusive of interest received as such upon the capital employed in the business and also exclusive of the dividends of certain mill shares held by the partners as well as the income of the immoveable property held by them jointly. the contention on behalf of the plaintiffs is, in our opinion, correct. as regards the defendant's objection that the payments on account of the legacies are to cease.....
Judgment:

1. The will and the codicils upon the construction of which the questions raised in this case depend are not very felicitously drawn, and the number of codicils which have succeeded each other (five in number) add to the difficulty of construing them. A great deal of the judgment of the lower Court was devoted and much of the argument on behalf of the appellants was directed to the construction of paragraphs 13 and 14 of the will. We think it unnecessary to consider this matter as codicil No. 4 is sufficient for the disposal of the main question in the case. The material part of it runs thus : 'Excluding the amount payable to Venkata Krishnayagaru and Subba Lakshmi, and for the abovementioned scholarship of Rs. 6,000, the money payable for the other items shall be debited against and discharged from the profits derived from the business or transactions belonging to Venkannagaru and myself. But it shall not be out of the principal. This will shall be carried out until the boy attains his proper age, i.e., twenty years but not afterwards. The 'opinion' of the members may be given effect to in all matters whenever necessary.'

2. The contention on behalf of the plaintiffs is, that the legacies given by the testator other than the three expressly excluded in the above passage, were payable from the entire income of profits derived from the estate held jointly by the testator and his partner Yenkannagaru, moveable or immoveable. The contention on behalf of the defendants is that they are payable only out of profits realised up to the time the first defendant attained his 20th year (such profits being exclusive of interest received as such upon the capital employed in the business and also exclusive of the dividends of certain mill shares held by the partners as well as the income of the immoveable property held by them jointly. The contention on behalf of the plaintiffs is, in our opinion, correct. As regards the defendant's objection that the payments on account of the legacies are to cease as soon as the first defendant attains the age of twenty years, reliance is placed upon the clause 'this will shall be carried out until the boy attains his proper age, i.e., twenty years but not afterwards.' The argument of the Advocate-General that this passage means nothing more than that the executors were to cease to manage when the first defendant attained twenty years is supported by the next following sentence which provides for the executors' opinion being obtained even subsequent to that period. Further, paragraphs 6, 7, 8 and 9 of the will also go strongly to support this argument on behalf of the plaintiffs since they contain provisions for payments which, from their very nature, might have to be made after the first defendant attained the age of twenty years.

3. As regards the defendant's other contention that the interest on the capital, the dividends on the shares and the income of the immoveable property should be excluded from the profits out of which the legacies were to be paid, it is dearly opposed to the ordinary meaning of the vernacular term 'labham' translated in the above quotation as profits. It is a very generic expression covering different kinds of profit or gain and that it included profit by way of interest in the view of the testator himself in connection with these testamentary instruments is clear from paragraphs 8 and 9 of the will where he directs certain amounts to be laid out at interest and uses the term 'labham' in respect of the interest thus to accrue. The second paragraph of the fifth codicil equally confirms this view. In the sentence 'in the event of his carrying' on a different trade, the profits or losses whereof shall also belong to him, 'the term used is' labham' and from the context it is impossible to doubt that it is used in its widest possible sense. It follows, therefore, that the term in question was not intended to be used in the fourth codicil in any, but its ordinary and comprehensive sense of profit, gain or income as opposed to the corpus yielding the same.

4. The next point is as to the amount due to the plaintiffs in respect of the legacy transferred to them under Exhibit B. We are unable to accede to the view urged on behalf of the plaintiffs that the case is within the exception in paragraph (b) of Section 135 of the Transfer of Property Act. No doubt one part of the consideration for the transfer was a debt due by the transferor to the transferees, but the other part was cash paid. The words of the section 'where it is made to a creditor in payment of what is due to him' can only apply to cases where the entire consideration is the debt. To hold that the present case is within the words would in effect be varying the language materially and would make the clause run as if the words were 'in payment wholly or in part of what is due to him.' In this view the plaintiffs will be entitled to receive on this account only Rs. 13,000 with interest thereon at the rate of 12 per cent, per annum which rate, we think should be allowed as was done by the Subordinate Judge in regard to the amount claimed under another assignment having regard specially to the fact that no less than twelve-thirteenths of the consideration was a debt due to the transferees.

5. The next point is whether the plaintiffs are entitled to be paid out of the general assets of the testator in the event of the failure of the source from which they were directed to be paid by the testator, No doubt, in the case of demonstrative legacies, the legatee is entitled to resort to the general assets on failure of the source intended, but that rule is of course subject to any direction to the contrary by the testator. It is, our opinion, that there is such a direction in the present case, as the will says, that they 'shall not be paid out of the principal.' The vernacular term for principal (asalu) used here means in the context the corpus of his estate. In other words the intention of the testator was that the source from which the legacies were to be discharged was the income of the estate and not any portion of the estate itself.

6. The last question is as to the interest payable upon the legacies. In the view we have taken of the inapplicability of Section 135(b) of the Transfer of Property Act, the matter is only important as regards the two legacies of Rs. 500 each payable to the plaintiffs. We agree with the Advocate-General that they carry interest at 6 per cent, per annum for the expiry of one year from the death of the testator, and it follows that this interest is payable out of the income or profits from which the principal amount of these legacies is made payable. That, according to English law, demonstrative legacies also carry interest from one year from the testator's death is clear upon the authorities to which our attention has been drawn on behalf of the plaintiffs see Mullins v. Smith 1 Drewry & Smale's Rep. 204 and Lord Londesborough v. Somerville 19 Beav. 295 We are unable to agree with the suggestion on behalf of the defendants that the Indian Law is different. Section 128 of the Indian Probate and Administration Act provides that the legatee is entitled to the produce of a specific legacy and Sections 130 and 131 entitle legatees to interest on general legacies. The absence of a distinct provision in regard to the payment of interest on demonstrative legacies does not imply an intention to disallow interest in such cases. As pointed out in Mullins v. Smith 1 Drewry & Smale's Rep. 204 supra, in the matter of interest, demonstrative legacies are to be viewed as of the nature of general legaoies. The total amount due, therefore, to the plaintiffs will be Rs. 1,000 with interest at 6 per cent, per annum from the expiry of one year from the testator's death till date of the lower Court's decree and Rs. 13,000 with interest at 12 per cent, per annum from the 16th July 1898 till the date of the lower Court's decree and the costs of the transfer, and Rs. 3,500 with interest at 12 per cent, per annum from the 1st July 1898 till the date of the lower Court's decree and the costs of the transfer with 6 per cent, per annum upon Rs. 17,500 and costs from the date of the lower Court's decree the date of payment.

7. It is unnecessary, so far as this case is concerned, to direct any account to be filed as the amount which had accrued as profit and which was attached before judgment will alone more than cover these payments.

8. In modification, therefore, of the decree of the Subordinate Judge we puss a decree for this amount.

9. Parties will pay and receive proportionate costs throughout, the memo, of objections included.


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