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TMI Blog2006 (5) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... total income for the assessment year 1959-60 and the previous year being 1.4.1958 to 31.3.1959. It is the case of the plaintiffs that the assessment for the year 1959-60 was finalised on 21.3.1964 and the taxable income was determined as being ₹ 2,24,302/-. Accordingly, a demand was raised on the original defendant No. 3 by the plaintiffs for a tax due of ₹ 2,46,798/-. It is the further case of the plaintiffs that however the original defendant no. 3 had filed return for the previous year 1958-59 on 16.10.1959 declaring his total income at ₹ 3,190/- only. On or about 9.7.1959 the original 3rd defendant assigned his two policies which were obtained on 25.11.1953 being Policy No. 466492 and 466493 under the Married Women's Property Act, III of 1874. The beneficiary designated under the said assignment was the original defendant no. 1. On 1.6.1960 the original defendant no. obtained a third policy from LIC being Policy No. 13330674 for ₹ 15,000/-and the policy was assigned to the wife under the Married Women's Property Act, III of 1874. Thereafter the original defendant no. 3 further obtained various policies and under Section 6 of the Married Women ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty Act, III of 1874 it is permissible to assign the policy in favour of the wife and children and such assignment thereafter cannot be questioned unless it is established that the said assignment is with a view to defraud the right of any of the creditors. He has submitted in the written statement that once an assignment is made he has no right, title or interest in the policies and, therefore, his policies cannot be attached and proceeds thereof can not be recovered by the plaintiffs for his so called liabilities. The original defendant no. 3 has further denied that the assignment of the policies was with a view to defeat the claim of the creditors. In para 10 of the written statement it has been submitted that the notice of demand was never served upon him for the assessment year 1959-60 on 24.3.1964 as claimed in the plaint or on any of the date and thus no question of any tax liability being payable and the recovery certificate by the Collector was wrongfully issued. The original defendant no. 3 has also denied that the said policies were assigned to the wife and the children with a view to defeat the rights of the plaintiffs. The defendant nos. 1A to 1D also filed a written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Evidence Act. Plaintiffs are required to set out the circumstances in which the said secondary evidence is sought to be produced. No such evidence has been led before the Court or before the Commissioner by the plaintiffs. Thus, it is not possible to accept the said documents Exhibits X-1 to Exhibit-11 on record of the file. I, therefore, do not take the said documents on record. After oral evidence was recorded of the two witnesses of the plaintiffs the matter was placed before me for arguments. The defendant has not led any oral evidence. 7. The insurance company has appeared and submitted a list of the policies which were issued by them and in whose favour the said policies were assigned. The insurance company has already deposited the entire amount of all the seven insurance policies in this Court pursuant to earlier orders passed by this Court. They have produced the receipts of the deposits of the said amount in this Court. Thus, the amounts of these seven policies are lying deposited in this Court. Page 1891 8. The learned Counsel for the plaintiffs has submitted two fold submission. Firstly it has been submitted that irrespective of any evidence which is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty may be available for the purpose of tax dues and the transfer by way of assignment in favour of the original defendant no. 1 and/or children is bad in law. 10. The learned Counsel for the plaintiffs has further alternatively submitted that even on merit the plaintiffs have been able to establish that there has been a fraudulent assignment of the said policies. It has been submitted that the returns were filed as far back as on 18.9.1958 and, therefore, part of the previous year 1.4.1958 to 31.3.1959 being the assessment year 1959-60. The said assessment return was filed on 16.10.1959 and notices were issued for the same in 1960. It has been submitted that thus when the policies were issued and assigned to the third party they were so assigned with the full knowledge by the original defendant no. 3 that he is likely to face the huge liability of the income-tax because the income tax authorities had proposed to include in the income the value of the diamond worth ₹ 2,79,900/- apprehended by the Customs Authorities. It Page 1892 has been further submitted that even the assessment was finalised on 21.3.1964 and the notice of demand was served on 21.3.1964 on the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are filed are not even Xerox copies or not even copies of the original and no evidence has been produced to establish the circumstances under which that the said documents can be introduced as secondary evidence. The learned Counsel for the defendant has further submitted that even if the documents are taken into consideration the most vital fact that assessment order and the demand notices were served on the original defendant no. 3 prior to the assignment of the policies is not established by the plaintiffs on evidence. There is no acknowledgement produced of any nature whatsoever to establish that in fact the assessment order dated 21.3.1964 and the notice dated 21.3.1964 were served on the original defendant no. 3 so as to hold that he had knowledge of the fact that there is a liability of huge payment of Income Tax by virtue of adding in his total income the amount of ₹ 2,79,900/- which was added on the basis of the recovery of the said diamonds by the customs authorities. It Page 1893 has been thus submitted that the contention of the learned Counsel for the plaintiffs that there is a fraudulent transfer is in fact not established and the plaintiffs have failed to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the wife. The only provision is the provision in the memorandum at the foot of the policy. I should have been myself doubtful if that memorandum was a sufficient expression that the policy was to be for the benefit of Winifred Gladitz, were it not for two decisions. One of these is the decision of TOMLIN, J., in Re Fleetwood's Policy (1) and the other that of FARWELL and KENNEDY, L.JJ., in Griffiths v. Fleming (2). Both these cases seem to me to decide that words which in substance are not distinguishable from the words of the memorandum which has been put upon the policy in question are a sufficient expression of intention that it is for the benefit of the person to whom the policy moneys are to Page 1894 be paid. Both decisions bind me, and I propose to follow them. Because of these decisions, which are authorities, this policy is a policy expressed to be for the benefit of Mrs. Winifred Gladitz within the provisions of the Married Women's Property Act, 1882, s. 11, and I therefore decide that Mrs. Winifred Gladitz is solely and beneficially entitled to the moneys paid by the underwriters under the policy, and that the moneys do not form part of the es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it shall, unless special trustees are duly appointed to receive and hold the same, be paid to the Official Trustee of the State in which the office at which the insurance was effected is situate, and shall be received and Page 1895 held by him upon the trusts expressed in the policy, or such of them as are then existing. And in reference to such sum he shall stand in the same position in all respects as if he had been duly appointed trustee thereof by a High Court, under Act No. XVII of 1864 (to constitute an Office of Official Trustee), Section 10 Nothing herein contained shall operate to destroy or impede the right of any creditor to be paid out of the proceeds of any policy of assurance which may have been effected with intent to defraud creditors. 19. The relevant portion of the provisions of Section 11 of the English Married Women's Property Act, 1882 reads as under : A policy of assurance effected by any man on his own life, and expressed to be for the benefit of his wife, or of his children, or of his wife and children, or any of them, or by any woman on her own life, and expressed to be for the benefit of her husband, or of her children, or of her husband and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back to the original insurer, can not be accepted. The learned Counsel for the plaintiffs have not relied upon any authority whether Indian or English in support of his aforesaid contention which I am not inclined to accept. The view taken by the English Courts is that once the vesting takes place under the Married Women's Property Act then that vesting is absolute and property therefore forms the part of such deceased person's estate who is the beneficiary and it cannot revert back to the original insurer. In the aforesaid circumstances, I reject the contention of the learned Counsel for the plaintiffs that on the death of the original defendant no. 1 the policies reverted back to the original defendant no. 3's estate and thus the plaintiffs are entitled to recover the said amount irrespective of the fact that whether the said fraudulent assignment is proved or not. 22. This leads me to the next contention namely, the contention of the learned Counsel for the plaintiffs that under Section 281 of the Income-Tax Act, 1961 the said transfer or assignment under Section 6 of the Married Women's Property Act III of 1874 is bad in law and/or void. In so far as this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is raised is that the assignment is void Page 1897 and is fraudulent on the basis of the service of the assessment order dated 21.3.1964 and notice of demand also dated 21.3.1964 on the original defendant no. 3. In my view the said submission cannot be accepted because no acknowledgement whatsoever has been produced on record. Even Xerox copy of any such acknowledgement is also not produced nor any circumstantial evidence to establish that in fact the notice of demand was served on the original defendant no. 3 has been laid in evidence. Once the plaintiffs fail to establish that there is any service of the notice of demand and assessment order on the original defendant no. 3 by the plaintiffs then the entire argument of fraudulent assignment only based on the said assessment order and demand notice must fall to ground. Thus, apart from the fact that the plaintiffs have failed to prove that the assignment is fraudulent and the burden of proof being on the plaintiffs, it was the plaintiffs duty to prove the same but the defendant has established that there is no service of notice of demand or the assessment order and, therefore, the question of establishing that the assignment is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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