The Estate Duty Act was applicable to Chandernagore as it was an All-India Act and was in force in the State of West Bengal on the appointed day, which was the 2nd day of October, 1954. The Chandernagore Merger Act, 1954 was valid as it was passed by Parliament under Article 3 of the Constitution. The amendment of the First Schedule to the Constitution was also valid as it was contained in the Merger Act itself.

Headnote:
ESTATE DUTY ACT - EXTENSION TO CHANDERNAGORE - CHANDERNAGORE (MERGER) ACT, 1954 - SECTIONS 2(A), 3, 4, 17 - CONSTITUTION OF INDIA - ARTICLES 1, 3, 4, 368 - VALIDITY OF THE CHANDERNAGORE MERGER ACT - APPLICABILITY OF THE ESTATE DUTY ACT TO CHANDERNAGORE - INTERPRETATION OF SECTION 17 OF THE MERGER ACT - SCOPE OF SECTION 19 OF THE MERGER ACT.
Fact of the Case:

The petitioners, sons of Manindra Nath Mondal, challenged the applicability of the Estate Duty Act to Chandernagore, which was previously a French territory but was ceded to India and merged into West Bengal. The petitioners argued that the Estate Duty Act did not apply to Chandernagore as it was not part of the State of West Bengal at the time of their father's death in 1955.
Finding of the Court:

The court held that the Estate Duty Act was applicable to Chandernagore as it was an All-India Act and was in force in the State of West Bengal on the appointed day, which was the 2nd day of October, 1954. The court also held that the Chandernagore Merger Act, 1954 was valid and that it extended the Estate Duty Act to Chandernagore. The court further held that Section 17 of the Merger Act did not avoid the gifts made by the petitioners' father, but merely laid down that if the gifts were not bona fide and not made within two years before death, they would be deemed to be the estate of the deceased for calculation of estate duty.
Issues: 1. Whether the Estate Duty Act applied to Chandernagore at the time of the death of the petitioners' father? 2. Whether the Chandernagore Merger Act, 1954 was valid? 3. Whether Section 17 of the Merger Act avoided the gifts made by the petitioners' father?
Ratio Decidendi: 1. The Estate Duty Act was an All-India Act and was in force in the State of West Bengal on the appointed day, which was the 2nd day of October, 1954. Therefore, under Section 17 of the Merger Act, this law extended to Chandernagore. 2. The Chandernagore Merger Act, 1954 was valid as it was passed by Parliament under Article 3 of the Constitution. The amendment of the First Schedule to the Constitution was also valid as it was contained in the Merger Act itself. 3. Section 17 of the Merger Act did not avoid the gifts made by the petitioners' father, but merely laid down that if the gifts were not bona fide and not made within two years before death, they would be deemed to be the estate of the deceased for calculation of estate duty.
Final Decision: The court dismissed the petitioners' application, holding that the Estate Duty Act was applicable to Chandernagore and that the gifts made by the petitioners' father were subject to estate duty.

( 1 ) THE facts in this case are shortly as follows; The Estate Duty Act, which is a Central Act, being Act No. 34 of 1953 (hereinafter referred to as the 'act') came into operation on the 6th October, 1953. It is an Act to provide for the levy and collection of an estate duty. Section 9 (1) of the Act provides that property taken under a disposition made by the deceased purporting to operate as an immediate gift inter vivos, whether by way of transfer, delivery, declaration of trust, settlement upon persons in succession or otherwise, which shall not have been bone fide made, two years or more before the death of the deceased, shall be deemed to pass on the death. In the case of gifts made for public charitable purposes the period is six months instead of two years, but we are not concerned with that in this case. The petitioners are sons of Manindra Nath Mondal, since deceased. They are residents of Chandranagore, which was previously a French territory, but was ceded to India and has now merged into the State of West Bengal. The said Manindra Nath Mondal, died on the 18th October, 1955 at Chandranagore. Prior to his death, on the 13th August, 1954, and on the 25th Sept. , 1954, the said Manindra Nath Mondal executed two Deeds of Gifts in favour of his sons the petitioners in this case. The Chandernagore (Merger) Act, 1954 is a Central Act, which came into operation on or about 29th September. 1954. Under section 2 (a) of the said Act, "appointed day" means the 2nd day of October, 1954. Section 3 provides that as and from the appointed day, Chandernagore, which has been defined under Section 2 (c) as--"the whole of the territory which immediately before the 9th day of June, 1952, was comprised in the Free Town of Chandernagore",--shall form part of the State of West Bengal and the boundaries of that State shall be so altered an to comprise within them the territory of Chandernagore. Section 4 contains an amendment of the First Schedule to the Constitution incorporating into the State of West Bengal the territory of Chandernagore. Section 17 of the said Act is important and is set out below:-"17. Extension of laws to Chandernagore-All laws which immediately before the appointed day extend to, or are in force in the State of West Bengal generally shall, as from that day, extend to, Or, as the case may be, come into force in Chandernagore".

( 2 ) THE position, therefore, is as follows: It the Estate' Duty Act applied to Chandernagore at the time of the death of the said Manindra Nath Mondal, that is to say, on the 18th October, 1955, then, in order to escape estate duty, the Deeds of Gifts would have not only to be bona fide but executed two years before the date of death. In this case, the two Deeds were not executed two years before the death, and as such the properties which are the subject-matter of the gifts would also be the subject-matter of estate duty. So far as the applicability of the Estate Duty Act is concerned. I see no difficulty at all. The Act was an All-India Act and was in force an the State of West Bengal on the appointed day. Therefore, under Section 17 of the Merger Act, this law extended to Chandernagore. Mr. Dutt appearing on behalf of the petitioners has tried to take refuge behind the provisions of the Constitution. His argument is as follows; He says that under Article 1 of the Constitution, prior to the 7th Amendment thereof In November, 1950 India, is to be a Union, of States and the States and the territories thereof shall be the States and their territories specified in Parts A B and C to the First Schedule. In Part A of the First Schedule of the Constitution Item No. 10 is 'west Bengal', which corresponded to the Province of West Bengal. The Constitution (7th Amendment) Act, 1956 came into operation on the 1st day of November, 1956. By this, the sub-division of the States into classes A, B and C was abandoned. The States and the territories thereof were to be as specified in the 1st Schedule, as

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Judicial Analysis

1961 Supreme(Cal) 66

HIGH COURT OF CALCUTTASinhaNAKULESHWAR MONDAL - AppellantVersusUNION OF INDIA (UOI) - RespondentCivil Rule 654 Of 1958Decided On : APRIL 05, 1961

Cases Referred (1)

Judicial Analysis

HIGH COURT OF CALCUTTA
Sinha
NAKULESHWAR MONDAL - Appellant
Versus
UNION OF INDIA (UOI) - Respondent
Civil Rule 654 Of 1958
Decided On : APRIL 05, 1961