9911796707
TMI Blog1964 (2) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... death of the deceased Nawab and that under section 9 of the Estate Duty Act, 1953, as the gift was made within two years of the death of the late Nawab, it was chargeable to estate duty. On appeal before the Central Board of Revenue, it was contended that the gift was governed by Mahomedan law, that section 130 of the Transfer of Property Act was not applicable and that the gift was made two years or more before the death of the late Nawab and, therefore, was not chargeable. Before the Central Board of Revenue, reliance was placed on a letter written to the petitioner by his late father dated May 3, 1955, two draft letters dated May 13, 1955, and an affidavit made on December 23, 1959, by Mr. Thacker, a partner of Messrs. Mulla and Mulla who, in May, 1955, were acting as solicitors for the late Nawab. The draft letter under which instructions were given to the Government of Bombay to pay the sum of ₹ 9,00,000 out of the said unpaid balance of ₹ 10,00,000 directly to the petitioner, was not signed on May 13, 1955, but was signed by the late Nawab on September 19, 1955, and sent to the Chief Minister. In view of the instructions contained in that letter, the amount of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were held to be governed purely by Mahomedan law, it must satisfy, in order to be a valid gift under that law, three ingredients, namely, (1) a declaration of gift by the donor, (2) its acceptance, express or implied, by or on behalf of the donee, and (3) delivery of possession of the subject-matter of the gift by the donor to the donee, such delivery of course being such as the subject-matter of the gift is susceptible of. Mr. Palkhivala contended, as he had done before the Central Board of Revenue, that all these three conditions were fulfilled and that the gift was complete when the letter of May 3, 1955, was written by the late Nawab. The learned Advocate-General, on the other hand, contended that not only section 130 of the Transfer of Property Act applied, but that the gift would also be governed by Mahomedan law and, therefore, the petitioner would have to establish not only that the gift was effected by an instrument in writing, in the present case by the letter dated May 3, 1955, but that it would also have to be established, as required by Mahomedan law which governed the parties, that there was acceptance of the gift by the donee. He argued that the Central Board of Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for the transfer of an actionable claim and a gift of such an actionable claim having been included in such transfers by the legislature by including in such transfers without consideration, the provisions of section 130 must prevail and override the provisions of Mahomedan law. Therefore, once the requirements of section 130 are complied with, a transfer of an actionable claim, whether by gift or otherwise, becomes complete and effectual. Under Mahomedan law, it is only if the three conditions, namely, a declaration or gift by the donor, its acceptance and delivery of possession of the subject-matter of the gift by the donor to the donee, are complied with, the gift becomes complete. But section 130 expressly provides that if the transfer of an actionable claim is effected by the execution of an instrument in writing signed by the transferor, such transfer shall become complete and effectual upon the execution of such instrument and once that is done, all the rights and remedies of the transferor become vested in the transferee. The provisions of section 130, therefore, are different from the provisions of Mahomedan law and as pointed out earlier, that section being a specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... happened first. On November 13, 1900, he executed an assignment of the policy in favour of the plaintiff, his wife, and got her name registered in the company's books. A part of the amount was paid to the plaintiff on its becoming due, but on December 12, 1912, the defendant intimated to the company that he had revoked the assignment in plaintiff's favour. The company having refused to recognise the plaintiff's title unless she established it in a court of law, the plaintiff filed the suit for a declaration that she was entitled to the money under the policy by virtue of the assignment in her favour. It was there held that the assignment of the insurance policy was valid as a gift under the Mahomedan law even though it was unaccompanied by delivery of the documents. The execution of the deed of assignment, the intimation of the fact to the insurance company and the requisition to register the assignee's name in the books of the company were sufficient acts of the donor to vest the property in the donee. It was further held that an assignment of a life policy being a transfer of an actionable claim, the deed creating the transfer was complete and effectual for the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tner. An arrangement was arrived at by which the defendant took over the liability of Munda to pay Gill and Co. and the other firm and Gill and Co. agreed to hold the bales to the account of the defendant instead of to the account of Munda. Munda thereafter wrote a letter to the defendant saying that their bales; namely, the aforesaid 212 bales of cotton which were lying with Gill and Co. were got transferred in the name of the defendant and that when these bales were sold, the defendant should credit the amount of the sale proceeds towards the aforesaid amount. The plaintiffs, who claimed a sum of money from Munda, filed a suit against him and obtained attachment before judgment in respect of the said bales of cotton. The defendant took steps to raise the attachment, but the court ordered the plaintiffs to file a suit against the defendant. In the suit, the plaintiffs contended that the transaction by which the defendant claimed the bales was void in view of section 130 of the Transfer of Property Act which required an instrument in writing. That contention was upheld by the trial court, but the appeal court set aside the decree passed by the trial court, holding that the arrangem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 130 of the Transfer of Property Act need not be in any particular form and that too narrow a construction of such an instrument (or the purpose of deciding whether it creates a transfer or not, would not be justifiable. But the decision of the Madras High Court in Ramaswami Chettiar v. K.S.M. Manickam Chettiar AIR 1934 Mad. 236 would seem to be of some assistance to the petitioner. In that case, a sum was lying with a banker as a deposit in the name of one A. In a subsequent arrangement between A and B ; it was arranged that a portion of the deposit should be transferred to B while the other portion should go to the benefit of A. Subsequently, A sued the banker for the recovery of the money lying in his name as deposit. Though the question there was whether the arrangement changed the nature of the sum as deposit or not the High Court held that the arrangement did not change the nature of the sum as a deposit and the amount still ; remained as deposit payable at A's demand, the High Court, while considering the effect of the arrangement, exhibit A , observed that the document could be looked at from the point of view of an assignment of an actionable claim within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently executed which would make the transfer complete and effectual and, therefore, it is the instrument which must bring about the transfer. That being so, any other document made subsequent to the document in question would not be relevant except in a case where the instrument in question is ambiguous or susceptible of two possible constructions in which case the court would be entitled to. look into the surrounding circumstances, including the conduct of the parties, revealing or throwing light on the intention of such parties. It must be remembered that the document in question is written by a father to his son and it is quite obvious that it is not written in too careful a way and suffers equally obviously from grammatical errors which add to the difficulty of its construction. Nevertheless, one has to bear in mind that the document is in the nature of a letter written by a father to his son whose intention undisputedly was to make a gift of ₹ 9,00,000 out of the sum of ₹ 10,00,000 which was the balance of the purchase, price remaining unpaid. Mr. Palkhivala's contention was that the letter creates and brings about the gift, while the contention urged by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , would not have to worry about investing the amount in proper investments. That he had come to these two decisions is clear from what follows, namely, I think this will be the best thing to do and I will have no interference or worry or bother about it. In the same way you are your own master . From these words, it would be justifiable to conclude that the donor had made up his mind that ₹ 9,00,000 and not ₹ 10,00,000 with some restrictions or conditions, as his original idea appears to be, should be handed over to the petitioner so that the petitioner can do what you like with your ₹ 9,00,000 and the donor would have no worry of having to think about investing the amount or discuss with the petitioner about such investment. But it seems that haying promised earlier that the entire balance of ₹ 10,00,000 would be available for the petitioner's benefit and having now decided to retain ₹ 1,00,000 out of it, the donor was at pains to show that the arrangement was not unfair in any way because he was to continue to pay the monthly allowance as before and mentions the fact that the property belonging to the mother of the petitioner, including compen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is clear from the two draft letters prepared by Messrs. Mulla and Mulla dated May 13, 1955, and brought on record, coupled with the fact that the finalised draft was in fact signed by the late Nawab on September 19, 1955, and despatched to the Government. However imperfect the letter might appear to be, read in its entirety and without being astute about its language, it manifests clearly the intention of the donor to gift ₹ 9,00,000 to the petitioner and that intention is Sought to be carried out and effected by the letter. Assuming that the construction which we are inclined to place upon this letter is not the only possible construction and the letter can also be construed in the way in which the revenue would have us construe, we would be entitled in that event to look into the subsequent conduct of the parties for the purpose of ascertaining the true intention of the donor. In that eventuality, the draft letter dated May 13, 1955, annexure E to the statement of the case, would yield considerable assistance. In paragraph 4 of that draft letter it is stated that: I have now made a gift of the sum of ₹ 9,00,000 out of the said Sum of ₹ 10,00,000 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit was not challenged before the Board and the Board accepted it as correct. The affidavit together with the draft letters would seem to make it clear that the late Nawab had made the gift of ₹ 9,00,000 in favour of the petitioner before the draft letter of May 13, 1955, was prepared and that could only mean that the gift was made under the letter dated May 3, 1955. Thus, if there was any ambiguity or doubt about the construction of the letter of May 3, 1955, such an ambiguity or doubt is dispelled by the fact that if the Nawab had not intended to effect the gift by that letter and if he had thought that the gift was to be made some time in future, he could not have instructed his attorneys that he had already made the gift. He could not have told his attorneys, while giving instructions for the preparation of the said draft letter dated May 13, 1955, that he had already made the gift of ₹ 9,00,000 in favour of the petitioner and that, consequently, they should draft a letter to the Government of Bombay to pay ₹ 1,00,000 to him and the rest, that is ₹ 9,00,000, to the petitioner. In this view of the matter, we are clear in our mind that the construct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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