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TMI Blog1986 (1) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... AR JUDGMENT The judgment of the court was delivered by SABYASACHI MUKHARJI J.-In this appeal by certificate granted by the High Court under article 133(1) of the Constitution against the judgment and order of the High Court of Gujarat dated 19/20th December, 1973, in Estate Duty Reference No. 2 of 1972, the question involved is regarding exemption from estate duty under section 29 of the Estate Duty Act, 1953 (hereinafter called " the Act "), which contemplates exemption from duty in cases where estate duty has been paid on settled property on the death of one of the parties to a marriage. The appellant is the accountable person and he is related to the deceased, Shri Kamlashankar Gopalshankar Bhachech, as one of his grandsons. Deceased Kamlashankar Gopalshankar died on October 25, 1964. The deceased had a wife named Mahendraba Kamlashankar Bhachech. The deceased and his wife each possessed certain properties which were of their own individual ownership. They were also jointly possessed of certain properties including a bungalow known as " Dilhar Dwar" situated in the Ellis Bridge area of Ahmedabad. The dispute in the reference out of which this appeal arose was with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hankar Bhachech, one of the executants of the joint will, died on January 3, 1954. On the death of Mahendraba, estate duty on her share of the property which passed on her death to Kamlashankar Gopalshankar has been duly paid. This is an admitted position. Kamlashankar Gopalshankar died, thereafter, on October 25, 1964. Upon his death, the appellant-cum-accountable person-cum-sole executor and trustee paid estate duty to the remaining extent of 50% on the properties mentioned in the above mentioned joint will of the husband and the wife. The case of the Revenue was that on the death of Mahendraba, the wife, the deceased, Kamlashankar Gopalshankar, the husband, had become the sole owner of the property in question and that he had filed his wealth-tax returns accordingly. The case of the appellant-accountable person was that since the property in question was settled by the joint will in favour of the grandsons and since duty had been paid on the death of one of the joint executants to the will, duty on the second death of the deceased was not payable on the whole estate by virtue of the provisions of section 29 of the Act. It was further contended that on a true construction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not be payable in respect thereof on the death of the other party to the marriage, unless the latter was at the time of his death, or had been at any time during the continuance of the settlement, competent to dispose of such property, and, if on his death subsequent limitations under the settlement take effect in respect of such property, was sui juris at the time of his death, or had been sui juris at any time while so competent to dispose of the property. " " Settled property " has been defined in section 2(19) of the Act as follows: " 2. In this Act, unless the context otherwise requires,-... (19) 'settled property' means property which stands limited to, or in trust for, any persons, natural or juridical, by way of succession, whether the settlement took effect before or after the commencement of this, Act; and 'settlement' means any disposition, including a dedication or endowment, whereby property is settled." Section 2(15) states " `property' includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale and also includes any property converted from one s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome into existence exactly at the moment of the death of the deceased. It was pointed out on behalf of the Revenue that " settlement " and" liability to pay estate duty " both had come into existence simultaneously on the death of Mahendraba and if that was so, section 29 had no application to the facts of this case. It was urged on behalf of the Revenue before the High Court that the word " paid " should be read as " payable " while construing section 29 of the Act. This interpretation which the Revenue wanted to place on the section was confined only to the first part thereof which stated that " the estate duty has already been paid " in respect of settled property since the date of the settlement on the death of one of the parties to the marriage, then the estate duty shall not be payable in respect thereof on the death of the other party to the marriage. This argument was, however, not accepted by the High Court. The High Court observed that looking at the language and spirit of the section, it was clear that the expression " if the estate duty has already been paid... since the date of the settlement " meant " if the estate duty has become payable or has been paid either sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the parties to the marriage. Whether the property in question here was settled property or not would depend upon the construction of the will. The question that fell for consideration by the High Court and also falls for consideration in this court is whether the deceased, Kamlashankar Gopalshankar, who survived his wife, one of the joint executants to the will, was competent to dispose of the share of Mahendraba which he had inherited under the said will. Therefore, the question is what is the true meaning and effect of the will ? Did the deceased, Kamlashankar Gopalshankar, have any " disposing power " over the property which is the subject-matter of the will ? On behalf of the accountable person, it was contended that the will in question was not merely a joint will but a will which was joint as well as mutual containing reciprocal agreements between the parties making the will and, therefore, the deceased, Kamlashankar Gopalshankar, had no power in his life time to revoke or alter the disposition made in the will or to do anything inter vivos after the death of Mahendraba which would have gone against the ultimate disposition indicated in the will. It was submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantially diminish the property taken by the survivor who can be trusted to give effect to the wishes of the deceased. Therefore, according to the High Court, there was no agreement of irrevocability and the survivor took an absolute interest in the whole of the property and, as such, section 29 would have no application to the facts of this case. In that view of the matter, the High Court answered the question in the negative and in favour of the Revenue. It is the correctness of that decision which is under challenge in this appeal. The sole question in the background of the provisions of the relevant sections, namely, section 29, read with other sections that have been referred to hereinbefore, is, whether it was merely a joint will or it was a joint and mutual will or, in other words, there was an agreement implied between the parties, namely, the executants of the will not to revoke the will after the death of one of the executants. It is, therefore, appropriate to refer to the relevant provision of the will. The will was jointly executed by Kamlashankar Gopalshankar and Mahendraba on December 24, 1950, and described as " last joint will and testament ". They appointed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the difference thus: " joint wills.-Persons may make joint wills, which are, however, revocable at any time by either of them or by the survivor. A joint will is looked upon as the will of each testator, and may be proved on the death of one. But the survivor will be treated in equity as a trustee of the joint property if there is a contract not to revoke the will; but the mere fact of the execution of a joint will is not sufficient to establish a contract not to revoke. So a legacy to a legatee who survived the first testator, but predeceased the second, did not lapse. Where a joint will is followed by a separate will which is conditional on a condition that fails, the joint will is not revoked even though the subsequent separate will contains revocation clause. Mutual wills.-The term 'mutual wills' is used to describe separate documents of a testamentary character made as the result of an agreement between the parties to create irrevocable interests in favour of ascertainable beneficiaries. The revocable nature of the wills under which the interests are created is fully recognised by the court of probate ; but, in certain circumstances, the court of equity will protect and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 108, para. 221, it states the law thus: "221. Restrictions by taking a benefit under a mutual will. Mutual wills may be made, either by a joint will or by separate wills, in pursuance of an agreement that they are not to be revoked. Such an agreement may appear from the wills, or may be proved outside the wills, but it is not established by the mere fact that the wills are in identical terms. If no such agreement is shown, each party remains free to revoke his will, if there are separate wills, or to revoke the joint will, so far as it disposes of his property, and the fact that one party has died without revoking the disposition of his property does not prevent the survivor from revoking the disposition which he has made notwithstanding that he has received benefits out of the estate of the deceased party. Even when there is such an agreement and one party has died after departing from it by revoking or altering the will, the survivor having notice of the breach cannot claim to have the later will set aside since the notice gives him the chance of altering the will as regards his own property, and the death of the deceased party is itself sufficient notice for this purpose. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... husband and wife had made mutual wills in the same form in pursuance of an agreement so as to make them, but there was no evidence of any further agreement in the matter. Each gave his or her property to the other absolutely with the same alternative provisions in case of lapse. The wife having survived and accepted her husband's property under the mutual will subsequently married again, and made a fresh will ignoring the alternative provisions of her own mutual will. The plaintiff in that case contended that from the agreement to make mutual wills in the form in which they were made, the survivor who had accepted the benefit under the mutual agreements became thereby subject to alternative trusts mentioned in the mutual wills. Reliance was placed on Dufour v. Pereira [1769] 21 ER 332. Reference was made to the observations of Astbury J. in that case [1925] 1 Ch 75, where the learned judge observed that in order to enforce the trust, the judge must be satisfied that there was a term " irrevocable " and, in such circumstances, he was to give effect to the same. But the learned judge was unable, having read the will, to find any mutuality in that form in the will in question. This de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to certain other clauses, namely, clause 2 of the will, the relevant portion of which has been set out hereinbefore in its entirety. Clause 3 deals with the situation when if any of the grandsons or the heirs wanted to sell his or their portion of building at any time what is to happen. Clause 4 also dealt with the situation if one of the grandsons died during their life time and before the death of the survivor (what would happen) ? Clause 5 has been referred to hereinbefore. Clause 6 deals with certain movable properties. Clause 7 dealt with separate properties. It is evident from the aforesaid that property in species, i.e., in specific proportion, was intended to be preserved and enjoyed by the ultimate legatees on the death of the survivor. In Kuppuswami Raja v. Perumal Raja, AIR 1964 Mad 291, it was observed that a joint will is a single testamentary instrument containing the wills of two or more persons and jointly executed by them; while mutual wills are the separate wills of two or more persons which are reciprocal in their provisions and executed in pursuance of the contract or agreement between two or more persons to dispose of their property to each other or to thir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to be disposed of in the manner indicated in the will. The last clause, viz., clause (4) of the will, indicated that the executants would have the right to amend or cancel the will, but nobody else would have that right. It was found that the exercise of the right of the power reserved by clause (4) was not made dependent by this clause on the co-existence of both the executants. It was held on the construction of reading of the will that after the death of the husband, the wife could revoke the part of the will by gifting away the house to another during her life time. The fact that the wife had been benefited from the will of the husband would not destroy her power of revoking her will because her will was quite an independent transaction. The deed of gift could not be taken to have revoked the will of the husband but only the will of the wife. The case was really decided in terms of the facts and circumstances of that case and wordings of the will. In the case of lit re Parsons: Parsons v. Attorney-General [1942] 2 All ER 496, the testatrix gave a legacy of pounds10,000 to her husband absolutely and she also gave the income of her residuary estate on trust for her husband f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also well-settled. But these principles will not strictly be applicable in the instant case because this appeal is concerned with the construction of the will in question and the will in question must be construed in such a manner as to find out the true intention of the executants or the testator and testatrix. For that, it is well-settled that a will must be read as a whole. Secondly, the expression must be read consistently. One has to bear in mind that we are concerned with the construction of the will and the true effect of the provisions thereof. Whether the deceased, Kamlashankar Gopalshankar, had disposing power over the share of the property of Mahendraba, his wife, acquired by him would depend not on how he has treated it but the true effect of the will. Furthermore, there is no question of contemporaneous conduct because the conduct of one of the parties subsequent to the death of one of the executants long after the execution of the will cannot be described as " contemporaneous conduct ". We need not, therefore, detain ourselves on the question of "contemporaneous exposition " by conduct of the parties in the facts of this case. Therefore, the will must be construed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther of them. Indubitably, in the instant case, the husband has received the benefit under the will of the wife. He could not have during his lifetime parted with the property, i.e., he did not have the disposing power over the properties in question after the death of the wife. It was emphasised that there was no evidence of mutuality. But there was enough evidence in the language of the will itself which as been set out hereinbefore that the property must remain intact specially after receipt of benefit by one of the executants on the death of the other until the death of both of them to be able to be succeeded to by the, ultimate legatees. The dominant intention of the testators is evidenced from the language used. This must be judged on the facts and circumstances of each case. It was not only that on certain basis that the will was made but it was intended to remain intact to be enjoyed by the grandchildren. The fact that both the executants have described themselves " joint owners " is not by itself conclusive on this point nor is the use of the expression " that the survivor shall become the owner " conclusive. On the other hand, the detailed provisions in specie to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. A different and separate agreement must be spelled out not to revoke the will after the death of one of the executants. That agreement must be clear though it need not be by a separate writing but must follow as a necessary implication which would be tantamount to an express agreement. 4. The predominant intention of the executants at the time of the execution, after the acceptance of the benefit of the execution, makes the will in this case irrevocable by the survivor of the executants. 5. Judged by the principles indicated above, on the facts and circumstances of this case, we are of the opinion, because of the specific clause that it was intended that the grandsons would receive the benefit in species and there being no provision for making up the deficiency or diminution, if any, it must follow that there was mutuality and Kamlashankar Gopalshankar was not competent to dispose of the property in any manner contrary to the ultimate disposition. 6. The fact that estate duty was paid is non sequitur. 7. The payment of wealth-tax by Kamlashankar Gopalshankar on the whole estate after the death of Mahendraba is not relevant. 8. The question of strict construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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