A charge on property can constitute a specific endowment within the meaning of the Madras Hindu Religious and Charitable Endowments Act, 1951, even if the settlor retains ownership of the property.

Headnote:
HINDU LAW - ENDOWMENT - SPECIFIC ENDOWMENT - CREATION - CHARGE ON PROPERTY - DIVESTING OF TITLE - MADRAS HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS ACT, 1951 (19 OF 1951), SS. 6(14), 6(16), 32(1).
Fact of the Case:

In 1914, a deed of settlement was executed, creating a charge on certain properties to meet the expenses of 17 specified charities. In 1953, the Commissioner for Hindu Religious and Charitable Endowments declared that 21% of the income from the properties would be deemed a specific endowment under the Madras Hindu Religious and Charitable Endowments Act, 1951. The appellant, a successor-in-interest to the settlors, challenged this order, arguing that no specific endowment had been created.
Finding of the Court:

The Supreme Court held that the deed of settlement did create a specific endowment within the meaning of the Act. The settlors had divested themselves of the right to receive a certain part of the income from the properties and had created a charge on the properties to secure the payment of the amount to the charities. This was sufficient to constitute an endowment, even though the settlors retained ownership of the properties.
Issues: Whether the deed of settlement created a specific endowment within the meaning of the Madras Hindu Religious and Charitable Endowments Act, 1951.
Ratio Decidendi: To create an endowment, the settlor must divest himself of the property endowed. This can be done by transferring the title to the property to the charity or by creating a charge on the property to secure the payment of the amount to the charity. In this case, the settlors had created a charge on the properties to secure the payment of the amount to the charities. This was sufficient to constitute an endowment, even though the settlors retained ownership of the properties.
Final Decision: The Supreme Court dismissed the appeal, subject to a variation in the amount of the endowment. The endowment was declared to be a right to receive Rs. 1,590/- out of the income of the properties, subject to the discretionary power of the owners of the properties to make a slight variation in the amounts mentioned.

Judgement

SARKAR, J. (For himself and Raghubar Dayal J.): On January 10, 1914, the appellant s predecessors-in-interest executed an instrument which has been described in these proceedings as a deed of settlement. There is some dispute as to the interpretation of this instrument but this much is not in controversy that it provided that the properties set out in Schedule A to it would be responsible for meeting the expenses of the charities specified in Schedule B. Schedule B set out 17 different charities and the amount to be spent on each. The total of the amounts mentioned came to Rs. 4,311-0-0 and the instrument provided that "in respect of the sum of Rs. 4,311-0-0 which has been set apart for the expenses of the aforesaid dharmams we have created a charge on the entire properties mentioned in the A Schedule herein. That the properties were charged with the payment of the amount is not disputed. It is unnecessary to refer to the other provisions in this instrument in detail and it will be sufficient to state that they provided that the balance of the income of the properties in Schedule A left after meeting the expenses of the charities was to be taken by the male members of the family after payment of certain maintenance, marriage and other expenses to various females.

2. On November 10, 1953, the Commissioner for Hindu Religious and Charitable Endowments, Madras, an officer appointed under the Madras Hindu Religious and Charitable Endowments Act, 1951, made in exercise of the powers conferred on him by the Act, an order declaring that 21 per cent of the income of the properties in Schedule A would be deemed to form a specific endowment within the meaning of the Act. Thereupon the appellant filed a suit under S. 62 (ii) of the Act against the Commissioner for cancellation of this order. The trial Court decreed the suit, but on appeal by the Commissioner to the High Court at Madras it was declared that a specific endowment was created by the instrument of 15. 9 per cent of the income for the time being received from the properties mentioned in Schedule A. The appellant challenges that decision in the present appeal. The Commissioner is represented by the State of Madras.

3. The appellant contends that no specific endowment had been created by the instrument. His contention is that all that was done was to create a charge on the properties to meet the expenses of certain charities but the settlors never divested themselves of those properties or any interest therein. It was said that the mere provision for meeting the expenses of the charities out of the income of the properties and the creation of the charge would not amount to the making of any endowment, for thereby the settlors could not be said to have divested themselves of anything. The main question in this appeal is whether this contention is right.

4. There is no dispute that in order that there may be an endowment within the meaning of the Act, the settlor must divest himself of the property endowed. To create an endowment he must give it and if he has given it, he of course has not retained it; he has then divested himself of it. Did the settlors then divest themselves of anything? We think they did. By the instrument the settlors, certainly divested themselves of the right to receive a certain part of the income derived from the properties in question. They deprived themselves of the right to deal with the properties free of charge as absolute owners which they previously were. The instrument was a binding instrument. This indeed is not in dispute. The rights created by it were, therefore, enforceable in law. The charities could compel the payment to them of the amount provided in Schedule B, and, if necessary for that purpose, enforce the charge. This, of course, could not be if the proprietors had retained the right to the amount or remained full owners of the property as before the creation of the charge. It must, therefore, be held that the proprietors had d

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1965 Supreme(SC) 199

A charge on property can constitute a specific endowment within the meaning of the Madras Hindu Religious and Charitable Endowments Act, 1951, even if the settlor retains ownership of the property.

Cases Referred (1)