1940 (8) TMI 33 - HC - Indian Laws

Summary

Issues Involved:

1. Validity of the gift of movable property.
2. Creation of a trust if no gift was made.

Detailed Analysis:

1. Validity of the Gift of Movable Property:

The primary issue was whether there was a valid gift of Rs. 2,00,000 by the testator to the testatrix. The testator made entries in the books of the Chrome Leather Company crediting the testatrix and other family members with certain sums debited to his capital account. The testator's intention was to ensure his relatives benefited from his life's work and to avoid death duties on his estate. However, the court found that there was no completed gift. According to the law, for a gift of movable property to be valid, it must be completed by delivery or a registered deed. The testator's entries in the books and subsequent letters indicated an intention to make a gift, but the necessary formalities were not completed. The court cited several precedents, including *Milroy v. Lord* and *Richards v. Delbridge*, which established that a voluntary settlement must be perfected by transferring the property or declaring a trust. The testator's actions did not meet these requirements, and therefore, there was no valid gift.

2. Creation of a Trust:

The second issue was whether a trust was created if there was no gift. The court examined the requirements for creating a trust under Section 6 of the Indian Trusts Act, 1882, which include the intention to create a trust, the purpose of the trust, the beneficiary, the trust property, and the transfer of the trust property to the trustee. The court found that the testator's actions did not indicate an intention to create a trust. The letter from the Chrome Leather Company to the testatrix was interpreted by the lower court as a declaration of trust, but the High Court disagreed. The letter referred to the sum as a "personal gift" and included restrictions on the realization of the gift, which did not suggest a trust. The testator's subsequent actions, including re-transferring the Rs. 2,00,000 to his capital account and stating that he had no legal obligation to pay interest, further indicated that he did not intend to create a trust. Therefore, the court concluded that no trust was created.

Conclusion:

The court held that there was no valid gift of Rs. 2,00,000 to the testatrix and no trust was created in respect of this sum. The appeal was allowed with costs, and a certificate for two counsel was granted.