Important point
Settlement is one of the recognized modes of transfer of moveable and immovable properties and in order to ascertain the true intention of the settlor one has to closely scrutinize the settlement deed, whether the intention of the settlor was to divest the property in his life time or to divest the property contingently on the happening of certain event.

Headnote:Transfer of Property Act, 1882—Sections 19 and 21—Indian Succession Act, 1925—Sections 119 and 120—Settlement—Terms of settlement should be closely examined to know intention of settlor—Original owner of schedule properties died leaving behind his wife, appellant as his sole legal heir—Deceased having no issue had a mind to adopt his sister’s son, ‘V’ but before he could do so, he expired—Appellant, wife of deceased, keeping in view wishes of deceased made settlements of A and B schedule properties in favour of ‘V’ while reserving her right and interest therein—‘V’, a bachelor executed a Will in respect of his other properties in favour of his brother, plaintiff—‘V’ died as a bachelor—Appellant revoked both the settlement deeds in favour of ‘V’—She executed a fresh settlement in favour of one of her relations—Plaintiff filed a suit to declare that he is entitled to suit property after the death of ‘V’—Whether after the death of ‘V’, appellant reserved her right to revoke the settlement—(Yes)—Settlement deeds clearly make out that ‘V’ was not made absolute owner of the property during the life time of settlor.
       Held : Settlement is one of the recognized modes of transfer of moveable and immovable properties under Hindu law. The Courts have accepted such mode as legal and valid mode of transfer of properties. Courts have emphasized that in order to find out the correct intent of the settlor the settlement deed has to be read as a whole and draw their inference of its content. Therefore, it has always been emphasized that the terms of the settlement should be closely examined and the intention of the settlor should be given effect to. Sometimes there is absolute vesting and sometimes there is contingent vesting as contemplated in Sections 19 and 21 of the Transfer of Property Act, 1882. In order to ascertain the true intention of the settlor one has to closely scrutinize the settlement deed, whether the intention of the settlor was to divest the property in his life time or to divest the property contingently on the happening of certain event. (Para 6)
       In this background, we have to examine the settlement deeds created by Kokilambal in favour of the deceased Varadan. The recitals of the settlement deeds i.e. A-1 and A-2 as reproduced above, clearly says that since Kokilambal had no son and her husband Konicka Mudaliyar during his life time has bestowed his love and affection on Varadan, the son of his elder sister, and therefore, out of love and affection, she has settled that the income derived from the properties i.e. Door No. 43, Kakkaran Basin Road, shall be enjoyed by herself and Varadan, till her life time and after her demise, it shall be enjoyed by Varadan absolutely. She further authorised him to collect the rental income of the aforesaid house and pay the corporation and land tax, repairs etc. and the remainder rental amount shall be enjoyed by herself and Varadan in moiety. The appellant No. 1 further settled that she would not alienate the property but both of them reserve the right to alienate the property jointly. Therefore, this settlement in no uncertain terms lays down that the properties in question will vest absolutely after the death of the appellant No. 1 and during their life time, both will enjoy the usufructs but Varadan would collect the rental income of the aforesaid property. It is further mentioned that both will have the right to alienate the property in question jointly. These conditions are very clear, Varadan would have acquired the absolute right over the property after the death of Kokilambal. Even during their life time if the property was to be alienated then the same would be alienated by them jointly meaning thereby that the appellant No. 1 continued to hold the property during her life time and both of them were permitted to enjoy the usufructs of that property. These settlement deeds in our opinion, clearly make out that Varadan was not made absolute owner of the property during the life time of the settlor, Kokilambal. (Para 7)
       There is an additional factor for coming to this conclusion. Varadan who was a bachelor and had certain property inherited from his real parents, he executed a will in favour of his brother, the plaintiff. But he did not include this property, that shows that at the relevant time it was also clear that the property which would come to him by way of settlement had not come to be vested in him and therefore, that property was not included in his will when he made the same with regard to the property which was received by him from his father or from his ancestors. (Para 9)
       Since Kokilambal survived after Varadan, she revoked the settlement deeds and issued a fresh settlement in favour of Appellant Nos. 2 & 3. On account of the death of Varadan Kokilambal who was the settlor remained the sole owner of the suit property because settlement deed had come to an end on account of the death of settlee, Varadan. Therefore, she had the right to execute fresh deed of settlement in favour of appellant Nos. 2 & 3. Thus, we do not find that subsequent settlement made by the appellant No. 1 in favour of Appellant Nos. 2 & 3 suffers from any illegality. (Para 10)

Judgment

A.K. Mathur, J.—This appeal is directed against an order passed by learned Single Judge of the High Court of Madras in Second Appeal No. 1866 of 1986 on November 19, 1998 whereby learned Single Judge affirmed the judgment and order of the First Appellate Court and dismissed the second appeal filed by the appellant herein.

2. Brief facts giving rise to this appeal are as follows. The plaintiff- respondent instituted Original Suit No. 8182 of 1980 before the XVIth Assistant Judge, City Civil Court, Chennai praying for seven reliefs. The main reliefs prayed for in the suit read as under :

“(i) Declaring that the plaintiff is entitled to the properties in plaint A & B Schedule absolutely after the life time of the 1st defendant;

(ii) For a declaration that the deeds of revocation dated 27.3.1979 registered as document Nos. 431 and 432 of 1979 in the office of the Sub-Registrar, Madras in respect of properties described in Schedule A and B hereunder are void in law and not valid and binding on the plaintiff;

(iii) For a declaration that the deeds of settlement dated 30.3.1979 executed by the 1st defendant in favour of defendants 2 and 3 in respect of plaint A and B schedule properties are void in law and are not valid and binding on the plaintiff;

(iv) For a declaration that the deed of mortgage dated 29.9.1979 executed by defendants 1 to 3 in favour of 4th defendant in respect of the plaint A and B Schedule properties are not valid and binding on the plaintiff;

(v) Directing the defendant to render true and correct account of the rental income from the properties described in the Schedule A and B and to pay over the half share payable to the plaintiff;”

According to the plaintiff in the suit, schedule properties A & B belonged to one Late Manicka Mudaliyar, the husband of the first defendant. That the said Manicka Mudaliyar died in or about 1963 leaving behind Kokilambal, the first defendant as his sole legal heir. Since the deceased Manicka Mudaliyar had no issue, he showered his love and affection to his elder sister’s son Varadan and had a mind to adopt him but before he could do so, he expired. Keeping in view the wishes of her deceased husband, Kokilambal got all the last rites performed through Varadan. Kokilambal, the wife of deceased Manicka Mudaliyar made settlement on June 12, 1963 of A schedule property in favour of Varadan while reserving her right and interest therein. Similarly, she also made a settlement on June 27, 1964 in respect of B schedule property and executed a deed of settlement in favour of Varadan. By virtue of these two settlement deeds, settler Kokilambal stipulated certain terms and conditions (reference shall be made hereinafter). Varadan who was a bachelor executed a will on May 22, 1978 in respect of his other properties other than those properties which were received by him from Kokilambal by way of settlement in favour of his brother (Plaintiff). But Varadan died as a bachelor on February 1, 1979. On March 27, 1979 the settlor, Kokilambal revoked both the settlement deeds in favour of Varadan and she executed a fresh settlement deed in favour of one Babu @ Pilani and Shantha @ Shanthi, the wife of Babu. Shanti was the daughter of Kokilambal’s brother. Thereafter, Varadan’s brother, N. Raman filed a suit to declare that he is entitled to the suit properties after the death of Varadan and sought a declaration that the revocation of settlement deed made by Kokilambal on March 27, 1979 be declared as null and void and likewise the fresh deed of settlement executed by Kokilambal on March 30, 1979 in favour of Defendant Nos. 2 & 3 i.e. Babu and Shanthi be declared void in law. The suit was dismissed by the trial court. The plaintiff preferred an appeal before the first appellate court which decreed the same. Against that an appeal was preferred by the appellant and the same was also dismissed by the impugned judgment of the High Court in second appeal on November 19, 1998. Aggrieved agai

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2005 Supreme(SC) 695

Cases Referred (4)