The judgment established the legal principle that for a valid gift of movable property and the creation of a trust, the requirements of the Indian Trusts Act, 1882, Section 6, must be fulfilled.

Alfred Henry Lionel Leach, C.J.

1. The appeal arises out of an originating summons issued on the Original Side of this Court at the instance of the respondent. There are two questions involved. The first question is whether there was a valid gift of movable property. The second question is whether a trust was created, if there was no gift. The respondent is the sole executor and trustee of the will and codicil of Ethel Mary Chambers, deceased, who was the first wife of George Alexander Chambers, deceased, who was the sole proprietor of a business known as The Chrome-Leather Company. It will be convenient to refer to Ethel Mary Chambers as the testatrix and to George Alexander Chambers as the testator. The testatrix died on the 23rd March, 1924 and the testator on the 16th November, 1937. The first appellant is his third wife and she and the second and the third appellants are the executors and trustees of his will and codicil. The fourth appellant is the son of the testator by his second wife, who predeceased him. The Chrome Leather Company had a leather business which was carried on some 12 miles from Madras, and the testator invested a large amount of capital in it. The balance sheet as at the 31st March, 1920 (which for the purposes of this case has been accepted as being correct) showed that the capital stood at Rs. 16,75,892-11-10. Nearly the whole of this amount, however, represented the value of buildings, land, plant, machinery and stock-in-trade. The cash in hand was in fact only Rs. 538-15-2. In the years 1917 and 1919 the testator caused certain entries to be made in the books of the Chrome Leather Company crediting the testatrix, their son (the respondent) and their two daughters, Phyllis Dora Chambers (now Mrs. P. Michell) and Shaila Florence Chambers with certain sums which were debited to his capital account. Separate accounts in the names of the testatrix, the respondent, and the two daughters were opened in the books and in these accounts the credits were entered.

2. On the 25th July, 191 9, the testator wrote to the Chrome. Leather Company instructing the firm to make such additions to the amounts standing to the credit of his wife and his children in the books as might be required to place the capital at their credit in the firm at the following figures: The testatrix Rs. 2,00,000, the respondent Rs. 40,000, and the daughters Rs. 40,000 each. The letter proceeded:

Please note also that as and from 1st April la t these sums at their respective credits are to bear interest at 6 per cent, payable half-yearly and. when the Chrome Leather Company is converted (either with or without the business of Chambers and Company) into a limited liability company preference shares at 6 per cent, with interest payable half-yearly are to be issued for the sums at their credit as stated above or such larger or lesser sums as may then be at their credit should they so desire. You have hitherto paid interest at 8 per cent, on the Rs. 45,000 which Mrs. Chambers has had with the firm, also on Rs. 15,000 which Mrs. Michell had. These payments may be deducted from the interest due on the 1st October, 1919, on the increased capital bearing interest at 6 per cent.

3. The business of Chambers and Company also belonged to the testator. In this letter the testator instructed his firm to write to the testatrix, his son and his daughters informing them of the amounts standing to their credit in the firms books. These letters were written and in each it was said:

This sum is entirely in the nature of a personal gift from Mr. Chambers to yourself and will bear interest at the rate of 6 per cent per annum payable half-yearly commencing from the 1st of April last, viz., 1919.

We wish you to understand that so long as the Chrome Leather Company remains a private company you will not be entitled to withdraw more than 10 per cent, of the capital. In the event of this company being converted into a limited liability company, either with or witho