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TMI Blog1982 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... rious properties of the deceased were involved. We are concerned here with the properties covered by the original trust deed. The deceased executed a deed of trust on 24th October, 1944, and settled some properties to the trust. As this is the main deed and the main question involved in this reference boils down to this, it would be necessary, in our opinion, to refer to the provisions of the said deed. The said deed indicated the object of the trust. The object of the trust, inter alia, is as follows: I have created this trust in order to preserve the properties mentioned in the schedule below in a state free from encumbrances and defects and to make development and enhancement of the same, get my Adya Sradh Ceremony performed out of the income of the said properties after my death, to get performed my Annual Sradh Ceremony, to offer pindas at Gaya and to get performed Tarpan according to Shastras for the solace of the departed souls of my ancestors, to get performed Annual Sradh and to perform the ten sacred rites, making arrangement for education and the maintenance of my heirs. God forbid if ever I leave no progeny, then this trust property, shall be included within Durgaman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in my said deed to make the written provision ofthe same enforceable and strong according to necessity or to rectify anything, I am adding the following paragraphs in the said trust deed and the same shall be effective along with the trust deed and shall be considered as a part of the trust deed. Then the settlor provided by cl. 5 of the second deed, inter alia, as follows. " My wife, Srimati Sefalika Debi, being a Hindu Pardanasin lady, shall be competent to give her power of attorney to my second son, Sri Manindranath Mukhopadhyay, or to other trustee of the then time, who or whoever shall act by virtue of the said power of attorney, all the said acts shall have to be deemed to have been done by the trustee, Srimati Sefalika Debi." Thereafter there was another deed on the 10th of September, 1956. The said deed recited an agreement which is as follows: " This deed of agreement is to the following effect. On the 24th October, 1944, (corresponding to 7th Kartik, 1351 B.S.) I have executed Makhan Lall Trust Deed of my own accord and in full possession of senses and the same has been registered on the 24th October, 1944, in the Calcutta Registry Office and registered in Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., Bijli Dooars Tea Co. Ltd. and Sydley Dooars Tea Co. Ltd. and Eastern Dooars Tea Co. Ltd. in respect of monthly salary, director's fee, dividend, etc., all the same shall be considered to be the income of the Makhan Lall Trust Estate and he shall remain bound to deposit all the said income with the Makhan Lall Trust Estate. In view of the said arrangement, if the source of income of Sri Manindranath Mukhopadhyay from Messrs. M. Mukherjee Co. is totally ceased, he shall be entitled to receive Rs. 250 per month from Makhan Lall Trust Estate for his own and present expenses. 6. Be it further known that if after the execution of this trust deed any income-tax or estate duty is levied on the second party, Makhan Lall Trust Estate, then the same shall have to be paid out of the deposited money of the second party Makhan Lall Trust Estate and if there is no other money in deposit the same shall have to be paid out of the sale proceeds of the said movable and immovable properties of the said trust estate. Be it further known that whatever money shall be required for carrying on any law suits or for payment of decretal amount, the same shall have to be paid in the aforesaid manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultimately the income of Mukherjee Co. was not transferred to the trust and the question of payment of Rs. 300 per month to the deceased did not arise as he did not retire from the above firm would not be material for deciding the issue before us. By the last modification made in 1960 clear provisions were made for payments to wife, as to the sons, to the specified extent and all these amounts were charged on the trust property. In our opinion, this was a clear case where the settlor had reserved for himself and for the maintenance of his wife and sons as well as daughters certain specified incomes out of the trust fund and there were repeated mentions of the possession in relation to the death of the deceased and the possession which was to follow such death. In this case, there was settlement by the deceased and there was reservation of interest to the settlor and he had also the right to amend the deed from time to time. This was not merely a theoretical right and the various amendments clearly show that the trust property was also extended and the liability of the trust for the payments for maintenance of the children of the deceased was also added from time to time. All this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effective and strong or any advice is received, then the same can be done by the appointed trustees or their representatives. The first thing to be noted in this clause is that the power of making a subsequent deed to make the first deed effective and strong or a deed of rectification was given to the trustees or their representatives, and was not given to the settlor or his heirs. Therefore, on behalf of the accountable person, it was urged that the settlor did not reserve any right to revoke the trust. It was further contended that if by any subsequent deed executed by the settlor there has been revocation of any of the clauses of the original deed or there has been anything apart from making the original deed effective and strong then the same was without the authority of the settlor. In this connection reference was made to the provisions of the Trusts Act. Section 6 of the Indian Trusts Act, 1882, provides as follows: 6. Subject to the provisions of section 5, a trust is created when the author of the trust indicates with reasonable certainty by any words or acts, (a) an intention on his part to create thereby a trust, (b) the purpose of the trust, (c) the beneficiary, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocable " is well settled. Revocation means calling back of a thing granted or a renunciation or rescindment of what was granted. See in this connection Stroud's judicial Dictionary, 4th Edn., p. 2391. In that view of the matter, we are of the opinion that on a proper construction of the first deed of settlement dated 24th October, 1944, it cannot be said that the same was a revocable trust. In this connection reference may be made to s. 12 of the E.D. Act, 1953. As a good deal of arguments have been advanced, it would be material to set out the relevant portion of s. 12 of the E.D. Act, 1953, which reads as follows: " 12. (1) Property passing under any settlement made by the deceased by deed or any other instrument not taking effect as a will whereby, an interest in such property for life or any other period determinable by reference to death is reserved either expressly or by implication to the settlor or whereby the settlor may have reserved to himself the right by the exercise of any power, to restore to himself or to reclaim the absolute interest in such property shall be deemed to pass on the settlor's death : ... Provided further that a house or part thereof compris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first settlement, we are of the opinion, that the subsequent settlements, purported to have been executed by the settlor, were of no effect and there was no such intention of the settlor reserved by the first document. On behalf of the Revenue, it was suggested that this controversy was not within the amplitude of the question referred to this court. We are, however, unable to accept this contention because the question before us is whether, on the construction of the different deeds which were set out hereinbefore, s. 12 read with s. 27 can be said to be attracted. Therefore, in this case, a construction of the four deeds becomes necessary for the purpose of determining whether the terms of settlement in the subsequent deeds were within the power of, the settlor to make in view of the provisions made in the first deed. Our attention was also drawn to the observations of the judicial Committee in the case of Sunder Singh Mallah Singh Sanatan Dharam High School Trust v. Managing Committee, Sunder Singh Mallah Singh, Rajput High School, AIR 1938 PC 73. After referring to the judgment of the High Court, their Lordships, at p. 76 of the report, had observed as follows: " Thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detract from the declaration of the trust and hence the subsequent conduct of the founder in dealing with the funds of the trust after its creation would not put an end to the trust itself. If a valid and complete dedication to trust had taken place, there would be no power left to revoke and no assertion on his part or the subsequent conduct of himself or his descendants contrary to such dedication would have the effect of nullifying it. We are in respectful agreement with this view. Our attention was also drawn to the observation of the Supreme Court in the case of CED v. R. Kanakasabai [1973] 89 ITR 251, where the deceased had executed separate deeds in favour of his sons, grandsons, daughter and wife, settling properties thereby severally in favour of the respective beneficiaries absolutely and with full power of alienation. The deed in favour of the sons and grandsons provided for payment of Rs. 1,000 per annum to the settlor, the deed in favour of the daughter provided for maintenance of the settlor and his wife during their lifetime and in the deed in favour of the wife the settlor expressed the hope that she will maintain him during his lifetime. No charge was, however, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down by the deceased by which two of the three minor sons were required to bear the maintenance expenses of their mother equally and the third minor son was required to bear the maintenance, education and marriage expenses of one of his sisters, while the two major sons were to bear the maintenance, education and marriage expenses of two other daughters of the deceased. In addition, the eldest son was also required to allow the deceased to continue to carry on his business in one of the buildings which he received under the gift deed in his favour. On the death of the deceased, the Assistant Controller included the value of all the properties included in the five gift deeds under s. 12 of the E.D. Act, 1953. On appeal, the Central Board held that, in addition to the applicability of s. 12, s. 10 was also applicable since the deceased continued to derive benefits directly attributable to the five gift deeds by reason of the fact that he was relieved of his liability to bear the maintenance and other expenses because of the conditions laid down in the gift deeds. On a reference, the High Court held that for the Explanation to s. 12 to apply there must be a provision for the; joint ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case. " Then the court dealt with s. 10 of the E.D. Act, 1953, but we are not concerned with that in this reference. This view was also reiterated by the Madras High Court in the case of CED v. K. A. Kader [1974] 96 ITR 289. There the Madras High Court held that the Explanation to s. 12(1) reserving interest in the settled properties had not been linked with the life or death of the settlor. In the instant case also, the obligation of the trustee was transferred and he or the subsequent trustee was to provide for the maintenance and education of the sons and also for the maintenance of the unmarried daughters. That was not linked with the lifetime; that obligation continued until the obligation was discharged and that was the contingency contemplated by the deed of settlement. We are in respectful agreement with the observation of the Madras High Court appearing at pp. 295 and 296 of the report on this aspect of the matter because if any reservation of any interest in the property was made in the sense, by getting a benefit during the lifetime of the settlor, then the Explanation would be otiose and useless. Our attention was also drawn to the observation of the Gujarat High ..... 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