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1977 Supreme(Mad) 409
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE RAMAPRASADA RAO & THE HONOURABLE MR. JUSTICE RATNAVEL PANDIAN
Pankajammal & Others
Versus
The Official Trustee of Madras
O.S.A. No. 11 of 1974
Decided On :Decided On : 27-09-1977
Important Points
Subject
Property Law - Contingent Interest
Act Referred
Headnote
SETTLEMENT DEEDS - INTERPRETATION - CONTINGENT INTEREST - SURRENDER OF LIFE INTEREST - EFFECT - TRANSFER OF PROPERTY ACT, S. 21 - INDIAN SUCCESSION ACT, SS. 102, 120 - The surrender of life interest by the life tenants in favor of the contingent remainderman does not extinguish the contingent interest and accelerate the vesting of the absolute estate in the remainderman.
Fact of the Case:
Namberumal Chetti executed six settlement deeds, creating trusts for the benefit of his family members and various charities. The deeds provided that after the termination of the life interests of the settlor's wife, son, and daughter-in-law, the corpus of the estate would be distributed among the children of the son. However, if the son died issueless, the corpus would be held in trust for the benefit of the named charities. The settlor's son had a son, who was the fourth plaintiff in the case. The first three plaintiffs, the wife, son, and daughter-in-law of the settlor, surrendered their life interests in favor of the fourth plaintiff. They then filed an originating summons seeking a declaration that the Official Trustee, who was managing the estate, was liable to deliver the entire corpus of the estate to the fourth plaintiff.
Finding of the Court:
The court held that the surrender of the life interests by the first three plaintiffs did not extinguish the contingent interest of the fourth plaintiff and accelerate the vesting of the absolute estate in him. The court found that the settlor's intention was to benefit the named charities in the event that his son died issueless. The court also found that the fourth plaintiff's interest was contingent upon his surviving his father.
Issues: Whether the surrender of the life interests by the first three plaintiffs extinguished the contingent interest of the fourth plaintiff and accelerated the vesting of the absolute estate in him.
Ratio Decidendi: The court held that the surrender of the life interests by the first three plaintiffs did not extinguish the contingent interest of the fourth plaintiff and accelerate the vesting of the absolute estate in him. The court found that the settlor's intention was to benefit the named charities in the event that his son died issueless. The court also found that the fourth plaintiff's interest was contingent upon his surviving his father. The court relied on the following legal principles: * A contingent interest is an interest in property that is created in favor of a person to take effect only on the happening of a specified uncertain event (Transfer of Property Act, S. 21). * A legacy bequeathed in case a specified uncertain event shall happen does not vest until that event happens (Indian Succession Act, S. 120).
Final Decision: The court dismissed the appeal and held that the fourth plaintiff did not acquire a vested interest by reason of the surrender deeds. The court also held that the fourth plaintiff could collect all the properties and income which plaintiffs 1 and 3 could get from the Official Trustee by himself and no more right he has by reason of the deeds of surrender.
For the Appellant:M/s. C. Vasudevan & K.N. Subramaniam, Advocates.
For the Respondent:Narayana Iyangar, Advocate.
RAMAPRASADA RAO, J.
1. On appeal from a judgment of N. S. Ramaswami, J. who was moved on the Original Civil jurisdiction of our Court to interpret the scope, content and purport of certain settlement deeds executed by one Namberumal Chetti and after obtaining the answer to the question raised therein unfavourably to themselves the appellants have come up in appeal against the said judgment. Namberumal Chetti whose deeds of settlement are to be scrutinised in this case dealt with liquid cash which he was possessed of under six deeds of settlement, the first of which commencing from 27th July 1950 and the last of which ending with 20th November 1972. The pattern of the documents and the manner in which he effected settlements and the mode by which he appointed the Official Trustee, Madras, to manage the funds over which he created certain charities as well are similar. It may be however necessary to refer to a later settlement deed, later than the settlement deed, d. 27th July 1950 for the purposes of fuller appreciation of the intention of the donor. We shall first take up the settlement deed, d. 27th July 1950. Under this settlement deed a sum of Rs. 10,000 was dealt with by the donor. It was transferred to the Official Trustee, Madras, for him to invest the sum in Government securities and pay out of the income from the said investments to the kith and kin of the donor and a moiety of such income to the various charities mentioned by the donor in the trust deeds. To be more precise, the Official Trustee was directed to pay out of the net income every half year—
“half of the net income to the settlors wife Pankajamma, who is the first plaintiff herein, for life and after her life to his only son, S. Ramakrishnan, who is the second plaintiff herein, for lift if he survives the said Pankajammal and then to Suseela, the third plaintiff herein, who is his daughter-in-law, for life if she survives the said S. Ramakrishnan”.
Thereafter, he nominated four charities and directed the Official Trustee to distribute the other moiety of the income amongst the four named charities, such as the Pachiappas Trust Board, Ramakrishna Mission Students Home, Mylapore, Chennapuri Annadana Samajam and the S.P.C.A., Madras. He followed up such dispositive clauses by more precise delineations so that there could not be any controversy in the matter of the implementation of his avowed object in the creation of the trust. Clauses 2 and 3 of t he settlement deeds have to be read together and cannot be read disjunctively or dissociatedly. Clauses 2 and 3 in so far as they are relevant to our case are cited—
Clause 2: On the termination of the life interests referred to in paragraph 1 (a) above, to distribute the entire corpus of the estate in equal shares among the children of the setters son, S. Ramakrishna”
Clause 3: Should, however, the said S. Rama” krishanan died issueless, the trustee shall, on the termination of the life interest aforesaid, hold the funds in trust and utilise the not income for purposes of increased distribution of such income to the four named charities as above”.
By reason of the defeasance clause, if clause (3) could be characterised as one, the donor wanted to increase the legacy in favour of each of the nominated trusts by one eighth. The result is that if Ramakrishnan died issueless and after the termination of the life interest enumerated above, then each one of the four charities would get one-fourth of the net income. It is in this perspective that this deed has to be interpreted.
2. We referred to the necessity to refer to a later settlement deed though the pattern under which the settlements were effected are the same. One such deed is the trust deed, d. 20th November 1952. Clause (3) therein is more explanatory and is indicative of the primary intention of the testator. Inter alia clause (3) of the trust deed, d. 20th November 1952 provides—
“Should however the said S. Ramakrishnan have no issues after the above lif
