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TMI Blog1979 (7) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... se and passed by the termination of such interest within the meaning of section 7 of the Estate Duty Act is correct ? " The assessee, the accountable person, is the son of one Raja Lalta Prasad, who died in the year 1924, leaving behind his widow, Rani Kalawati and five sons, one of whom is the accountable person, and his brother, Rai Bahadur Sahu Har Prasad, and his son, Sahu Jagdish Prasad. The family was joint at the time of the death of Raja Lalta Prasad. On April 10, 1933, a partial partition took place, which was followed by a final partition on December 18, 1941. In that, Rani Kalawati relinquished all her claim to the property in consideration of a monthly payment of Rs. 125 to her during her lifetime by each of her four sons. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either raised or canvassed before it. This being so, it is not possible to allow counsel to raise a plea based on s. 40 of the Act. Turning now to the dispute regarding the applicability of s. 7. The relevant part of the provision may be extracted : " 7. (1) Subject to the provisions of this section, property in which the deceased, or any other person had an interest ceasing on the death of the deceased, shall be deemed to pass on the deceased's death to the extent to which a benefit accrues or arises by the cesser of such interest, including, in particular, a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana law. " In order that s. 7(1) should be attracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her death the said right to receive the said amount from the aforesaid parties would terminate. This is followed by cl. 3 of the substantive part of the agreement, which is to the following effect : " Clause 3.--THAT IN CONSIDERATION OF THE AGREEMENT AFORESAID and in consideration of monthly payment of a sum of Rs. 125 (Rupees one hundred and twenty-five only) to the said Rani Kalawati the party hereto of the SEVENTH part, during her lifetime by EACH of her four sons, namely, the parties hereto of the THIRD, FOURTH, FIFTH and the SIXTH parts, the said Rani Kalawati the party hereto of the SEVENTH part doth hereby relinquish all her claims whether by way of maintenance or residence and all her right to claim a share in the said joint fam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deceased should have held an interest in some specific property, and as in a floating charge the property varies from time to time, s. 7 is inapplicable. He drew our attention to the case of In re Indus Film Corporation (In liquidation) [1939] 9 Comp Cas 166 (Sind), where the nature of a floating charge is explained. It was pointed out in that case that a floating charge is one where no restraint is made on the conduct of business of the debtor, the debtor being free to deal with the property charged. It was held that in such a case the charge does not crystallize into a fixed security. It is not necessary on the facts of this case to decide whether s. 7 takes care of a floating charge also, for, in the present case, we find that, apart fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be, apply to such charge. " A perusal of this provision indicates that all that is required for creating a charge is that immovable properties of a person should be made security for the payment of money to another. Thus, as soon as a property is given in security s. 100 is attracted. It is true that the creditor will enforce his charge on default, but that by itself does not postpone the creation of an immediate charge. The decision in the case of Harjas Rai v. Naurang [1906] 3 ALJ 220 is clearly a distinguishable one. In that case the deed recited : " If in the future any person appears as a claimant of the property sold and makes claim, in consequence of which there is an injury to the property sold or we do not give possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jus in rem while a charge is jus ad rem. Now, s. 7 does not require that there should be a transfer of an interest in the property like that in the case of a mortgage. It rests satisfied in case the deceased had an interest in property. When a charge is created, a right which is something more than personal obligation comes into existence, that being a right to receive payment out of the specified property. There is, in principle, very little difference between a charge and a simple mortgage, the main difference being that while in a mortgage the right is good against subsequent transfers, in the case of a charge, it is good only against subsequent transfers with notice or volunteers with or without notice. As Rani Kalawati Devi had a right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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