1969 (7) TMI 30 - SC - Indian Laws

Whether in the present case the investment was made by renewal of fixed deposit receipts after August 16, 1953, for a purpose which the bank knew was inconsistent with Purnabai s fiduciary character and duty? Held that - We are unable to hold, in the circumstances, that bona fide possession and enjoyment of the property gifted was immediately assumed by Suryakant and thenceforward retained by him to the entire exclusion of Purnabai. The right retained by Purnabai to have the receipts made out in her name jointly with Suryakant and the power to recover the amount from the bank without the concurrence of Suryakant clearly indicate that she was not excluded, but she had retained important benefits in herself in the fixed deposit receipts. It is true that the third receipt was encashed during the lifetime of Purnabai, and the amount was invested in the name of Suryakant alone. But the encashment and reinvestment were within two years of the death of Purnabai and the amounts so reinvested were liable to be included in the estate of Purnabai. The argument that fixed deposit receipts had remined exclusively in the possession of Satyanarayana as guardian of Suryakant and they were obtained by him from Purnabai for the purpose of renewal is not supported by any evidence. There is also no evidence that in obtaining the receipts in the joint names Purnabai acted as a guardian of Suryakant nor that the was a benamidar of Suryakant. We are of the view that the High Court was right in answering the question against the appellant.

Summary

Issues:
1. Validity of a gift deed made by Purnabai in favor of Suryakant regarding three deposit receipts.
2. Determination of possession and enjoyment of the gifted property by the donee to the exclusion of the donor.
3. Inclusion of the gifted property in the estate of Purnabai for estate duty assessment.

Analysis:
1. The judgment revolves around a gift deed executed by Purnabai in favor of Suryakant regarding three deposit receipts held with a bank. Purnabai intended to gift the amounts to Suryakant and took steps to formalize the gift through a deed on August 16, 1953. The bank was duly informed, and the receipts were renewed in joint names. The issue arose when the estate duty authorities included the gifted property in Purnabai's estate.

2. The central question was whether Suryakant assumed bona fide possession and enjoyment of the gifted property to the exclusion of Purnabai, as required by the Estate Duty Act. Despite the gift deed and renewal of receipts in joint names, Purnabai retained control and benefits over the deposits. She continued to present the receipts for renewal and had the authority to withdraw the funds without Suryakant's involvement. This indicated that Suryakant did not entirely exclude Purnabai from the possession and enjoyment of the gifted property.

3. The High Court upheld the inclusion of the gifted property in Purnabai's estate for estate duty assessment. The court found that Purnabai had not relinquished control over the deposits despite the gift deed and renewal in joint names. The encashment and reinvestment of one receipt in Suryakant's name within two years of Purnabai's death further supported the decision to include the amount in her estate. The argument that Purnabai acted as a benamidar for Suryakant or as his guardian was not substantiated, leading to the dismissal of the appeal.

This detailed analysis highlights the complexities surrounding the validity of the gift deed, the criteria for possession and enjoyment under the Estate Duty Act, and the implications for estate duty assessment in cases of intergenerational wealth transfers.