2001 (3) TMI 1068 - HC - Indian Laws

Summary

Issues Involved:
1. Nature of the Deed: Whether the deed dated 5.6.1970 was a gift or a will.
2. Acceptance and Effectiveness: Whether the deed was accepted and came into effect.
3. Validity of Subsequent Deeds: Validity of Ex-B1 (cancellation deed) and Ex-B2 (subsequent settlement deed).

Detailed Analysis:

Nature of the Deed:
The primary issue was to determine if the deed dated 5.6.1970 was a gift or a will. The court examined the crucial recitals of the deed:
- Clause 1: The settlor settles the property described in Schedule A on the first beneficiary, who shall be entitled to possess and enjoy the rents and profits from the said property during his lifetime.
- Clause 2: The first beneficiary shall only enjoy the income from the said property and shall have no right of alienation.
- Clause 3: After the lifetime of the first beneficiary, the property shall vest absolutely in the natural children of the first beneficiary and his wife.
- Clause 4: If there are no natural children, the property shall vest in Ajit Kumar, and if Ajit Kumar is not alive, it shall vest in his heirs.
- Clause 6: The property described in Schedule II is settled absolutely on the third beneficiary.

The court noted that the settlor retained his life interest and the right to enjoy the income from the property during his lifetime. The first beneficiary, Arunachalam, only had a life interest without any power of alienation, which would take effect after the settlor's lifetime. The court concluded that the deed did not transfer any right, title, or interest on the date of execution, indicating it was more akin to a will rather than a settlement.

Acceptance and Effectiveness:
The court examined whether the deed was accepted and came into effect. The legal requirement under Section 122 of the Transfer of Property Act mandates acceptance of the gift during the lifetime of the donor. The court found no evidence of acceptance by Arunachalam, the first beneficiary. Mere standing by during the execution or registration of the deed was insufficient to prove acceptance. The court emphasized the necessity of positive conduct to demonstrate acceptance, which was absent in this case. Consequently, the deed did not come into effect as a settlement.

Validity of Subsequent Deeds:
Given the conclusion that the deed dated 5.6.1970 was not a valid settlement, the settlor retained the right to deal with the property. Therefore, the subsequent cancellation deed (Ex-B1) and the new settlement deed (Ex-B2) executed by the settlor were deemed valid. The court held that since the original deed did not confer any immediate rights, the settlor was free to revoke and re-settle the property.

Conclusion:
The court dismissed both second appeals, affirming the decisions of the lower courts. The deed dated 5.6.1970 was determined to be a will rather than a settlement, and there was no evidence of acceptance by the first beneficiary. Consequently, the subsequent deeds executed by the settlor were valid, and the appellant could not claim any title to the suit property. The appeals were dismissed without costs, considering the relationship between the parties.