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1983 Supreme(AP) 468
Andhra Pradesh High Court
Judges : PUNNAIAH
Trustees of Sahebzadi Anwar Begum Trust - Appellant
Versus
Controller of EState Duty, Hyderabad - Respondent
Decided On : 12-09-83
A perpetual family settlement is void under sections 13 and 14 of the Transfer of Property Act, 1882, and is not valid under Muslim law.
Headnote:
ESTATE DUTY - TRUST - VALIDITY - TRANSFER OF PROPERTY ACT, SECTIONS 13 AND 14 - MUSSALMAN WAKF VALIDATING ACT, 1913 - LIMITATION ACT, SECTION 27 - ARTICLE 113 - RIGHT TO SUE - ACCRUAL.
Fact of the Case:
Two trusts were created by the Nizam of Hyderabad in 1953, one in favor of his daughter Sahebzadi Oolia Kulsam and the other in favor of his daughter-in-law Sahebzadi Anwar Begum. The trusts were challenged by the Revenue on the ground that they were void under sections 13 and 14 of the Transfer of Property Act, 1882. The trustees contended that the trusts were valid under the Mussalman Wakf Validating Act, 1913, and that the Revenue's claim was barred by limitation under Article 113 of the Limitation Act, 1963.
Finding of the Court:
The court held that the trusts were void under sections 13 and 14 of the Transfer of Property Act, 1882, as they were perpetual family settlements and not valid under Muslim law. The court also held that the Mussalman Wakf Validating Act, 1913, did not apply to the Hyderabad State and that the trusts were not covered by the Nizam Trusts (Validating) Act, 1950. The court further held that the Revenue's claim was not barred by limitation under Article 113 of the Limitation Act, 1963, as the right to sue accrued only when there was a demand and refusal, and there was no such demand and refusal in the present case.
Issues: 1. Whether the trusts were void under sections 13 and 14 of the Transfer of Property Act, 1882? 2. Whether the trusts were valid under the Mussalman Wakf Validating Act, 1913? 3. Whether the Revenue's claim was barred by limitation under Article 113 of the Limitation Act, 1963?
Ratio Decidendi: 1. The court held that the trusts were void under sections 13 and 14 of the Transfer of Property Act, 1882, as they were perpetual family settlements and not valid under Muslim law. The court relied on the decision of the Privy Council in Abdul Fata Mahomed Ishak v. Russomoy Dhur Chowdhry, (1895) 22 I.A. 76, which held that a perpetual family settlement expressly made as Wakf is not legal under Mohammedan Law merely because there is an ultimate but illusory gift to the poor. 2. The court held that the Mussalman Wakf Validating Act, 1913, did not apply to the Hyderabad State. The court relied on the decision of the Division Bench in Salah v. Husain, A.I.R. 1955 Hyderabad 229, which held that neither the Mussalman Wakf Validating Act of 1913 nor the Mussalman Wakf Validating Act of 1930 has been applied to the Hyderabad state by virtue of Part-B State List Act and the result is that no validity could be given to the Wakf in question by reason of the statutory provision in the above enactments. 3. The court held that the Revenue's claim was not barred by limitation under Article 113 of the Limitation Act, 1963, as the right to sue accrued only when there was a demand and refusal, and there was no such demand and refusal in the present case. The court relied on the decision of the Supreme Court in M.T. Bolo v. Mt. Koklan, L.R. 57 I.A. 325, which held that there can be no "right to sue" until there is an accrual of the right asserted in the suit and its infringement or atleast a clear and unequivocal threat to infringe that right by the defendant against whom the suit is instituted.
Final Decision: The court answered all the questions in favor of the Revenue and against the trustees-assessees. The court held that the trusts were void ab initio and that the value of the corpus of the trusts was liable to be included in the principal value of the estate of the Nizam of Hyderabad.
( 1 ) THESE cases are referred to by the Income-tax Appellate Tribunal under section 64 (1) of the Estate Duty act. R. C. Nos. 85/78 and 95/73 deal with the Trust called Shabzadi Anwar Begum trust, whereas R. C. Nos. 87/78 and 88/78 deal with the Trust called Sahabzadi Oolia kulsam Trust. R. C. No. 85 of 1978 arises out of the reference made at the instance of the Trustees of Sahebzadi Anwar Begum trust and the question referred to for the decision of this Court is as follows: "whether on the facts and in the circumstances of the case the trust created by the deceased on 21. 3. 1953 known as Sahebzadi Anwar Begum Trust is ab initio void? r. C. No. 95 of 1978 arises out of the reference made at the instance of the department and the question referred to for the decision of this court is as follows: "whether on the facts and in the" circumstances of the cases and on the interpretation of the trust deed the value of the corpus of the Shabzadi anwar Begum Trust is liable to be included in the principal value of the estate of late Sri Osman Ali Khan bahadur?" r. C. No. 87/78 arises out of the reference made at the instance of the Trustees of sahebzadi Oolia Kulsam Trust and the question referred to for the decision of this Court is as follows: "whether on the facts and in the circumstances of the case the trust created by the deceased on 21. 3. 1953 known as Sahebzadi Oolia Kulsam Trust is ab initio void?" r. C. No. 88/78 arises out of the reference made at the instance of the Department and the question referred to for the decision of this Court is as follows: "whether on the facts and in the circumstances of the case and on the interpretation of the trust deed the value of the corpus of the Sahebzadi oolia Kulsam Trust is liable to be included in the principal value of the estate of late Sri Osman Ali Khan bahadur?"
( 2 ) ALL the four references can be disposed of by a common judgment as questions of law referred to are identical.
( 3 ) WE would like to state briefly the facts leading to these references.
( 4 ) LATE Sri Osman Ali Khan Bahadur created two trusts on 21. 3. 1953 one in favour of his daughter Sahebzadi Oolia kulsam and another in favour of his daughter-in-law Sahebzadi Anwar Begum wife of late Nizam s second prince muazzam Jah. The two trusts are fairly on identical terms.
( 5 ) IT is sufficient if we mention the terms of the trust created in favour of oolia Kulsum Trust i. e. the daughter. According to the trust deed the jewellery settled upon the trust was allowed to be worn by the said lady after her marriage or on her completing the age of 30 years whichever is earlier and she would be allowed to wear the jewellery during her life and after her death they should be sold and invested. After her death or divorce or marriage the trustees were directed to convert the jewellary into an income of yielding investment and the net income from the said investment was directed to be paid to her children or remoter issue of price Muzzam Jah Bahadur from generation to generation in the ratio of two shares for male and one share for female. In the event of absence of the contingencies mentioned above the income is ultimately directed to be paid to remoter issues of Prince Azam Jah Bahadur from generation to generation in the ratio of two shares for male and one share for female. On the death of last survivor of the persons entitled to the net income of the fund the income was directed to be utilised for the benefit of holy shrine at Khum in Iran. The same pattern of benefits and succession was envisaged for the other properties also.
( 6 ) THE Assistant Controller of the Estate duty examined these two trusts for the purpose of estate duty after the death of Nizam. He took the view that the object of the trust was to confer benefit from generation to generation and as Such it was repugnant to sections 13 and 14 of the Transfer of Property Act and the provisions of section 5 of the Estate Duty act are attracted.
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