# Chief ConwWsioner 4frM' v. Ratlliey Shyam Dani Bhllgwati J, Novemh<T 19

- **Citation:** [1957] 1 S.C.R. 77
- **Court:** Supreme Court of India
- **Decided:** 1955-08-08
- **Case number:** Civil Appeal No. 35 of 1955
- **Bench:** Jagannadhadas, B. P. S1Nha, }Afer Imam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/chief-conwwsioner-4frm-v-ratlliey-shyam-dani-bhllgwati-j-novemh-t-19-1374
- **Pages:** 22

## Headnote

Trust deed-Construction-Vested interest or contingent interest
-Transfer of Property Act, 1882 (IV of 1882), ss. 19, 21-Attachable interest-Execution of decree-Compromise decree providing for
a personal remedy and a charge-Whether personal remedy could be
pursued in the first instance.
1956
Chief ConwWsioner 4frM'
v.
Ratlliey
Shyam
Dani
Bhllgwati J,
Novemh<T 19
1956
llajts ](- lll!J
••
Sa.Ii Debi
78
SUPREME .COURT REPORTS
[1957]
A settlor executed a deed of trust in respect of all his pr<>-
perties whereby he n1ade arrangements for the discharge of his.
debts and for the devolution of the ,eroperty on his sons. The
provisions of the deed showed that (I ) specified lots of property
were allotted to each of his two sons, (2) the present income was
to be applied for the discharge of the debts after payment of
specified sums of money therefrom by way of monthly payments
to the setdor and his sons and (3) in the event of any of the sons
dying before the termination of the trust, his interest in the
monthly payments aforesaid was to devolve on his heirs. It was
also provided that a house, L, included in the lots allotted to the
elder son (appellant) was to be subject to the right of residence of
the second son, and his heirs until a suitable house was purchased
by the appellant or his heirs and n1ade over to him. Finally it
was provided that on the liquidation of the debts and after the
death of the settler the trust was to co1ne to an end and the·
respective · lots of property including the surplus income thereof
were to devolve on the appellant and his brother or their heirs~
Some time after the execution of the deed the settlor died.
It was
contended for the appellant that under the terms of the deed of
trust his interest in the properties allotted to . him
was
only
contingerit on the payment of the debts of the settlor and the
discharge of the obligation to provide alternative accommodation
to his brother and consequently his interest could not be attached
in execution of a decree.
Held, that the appellant had a vested interest but the enjoyrucnt of the properties was restricted so long as the debts were
not discharged, and as regards the house, L, enjoymefit was
further restricted to the extent that it was subject to the right
of residence of his brother and his heirs until the obligation to
provide alternative accommodation was discharged by the appd·
lant or his heirs.
Where a compron1ise decree provides both for a personal
remedy and a charge,
the question whether the decree-holder
can
pursue the personal remedy while reserving the remedy
under the charge depends on the intention to be gathered from
the terms of the decree.

## Text

_Characters 0–39,753 of 48,840. This is a partial read: ask again with offset=39753 for what follows._

S.C.R.
SUPREME COURT REPORTS
77
failed to provide the proper procedure for taking of the
steps
hereinabove indicated for finalising the electoral
roll of ~he Municipality. If that was the true position
the electoral roll of the Municipality which had been
authenticated and published by the Chief Commissioner
on August 8, 1955, was certainly not an electoral roll
prepared in accordance with law on the basis of which
the elections and poll to the Ajmer Municipal Committee
could be held either on September 9, 1955, or at any
time thereafter.
In the view which we hold, it is not necessary to
consider whether, in the event of an inconsistency
between s. 30, sub-s. (2), of the Regulation and the
Rules framed by the Chief Commissioner in exercise of
the power conferred under s. 43 of the Regulation, the
section would prevail or the Rules.
Suffice it to say
that the electoral roll of the Ajmer Municipality which
was authenticated and published by the Chief Commissioner on August 8, 1955, was not in conformity
with the provisions of s. 30, sub-s. (2), and the relevant
provisions of the Regulation and could not form the
basis of any valid elections to be held to the Ajmer
Municipal Committee.
Under the circuP1;,tances we see no substance in the
appeal and dismiss tb.e same. There will be, however,
no order as to costs of the appeal in so far as the
respondent has not appeared and contested the appeal
before us.
Appeal dismissed.
RA JES KANT A ROY
fJ.
SANTI DEBI
(JAGANNADHADAS, B. P. S1NHA and }AFER IMAM, JJ.)
Trust deed-Construction-Vested interest or contingent interest
-Transfer of Property Act, 1882 (IV of 1882), ss. 19, 21-Attachable interest-Execution of decree-Compromise decree providing for
a personal remedy and a charge-Whether personal remedy could be
pursued in the first instance.
1956
Chief ConwWsioner 4frM'
v.
Ratlliey
Shyam
Dani
Bhllgwati J,
Novemh<T 19
1956
llajts ](- lll!J
••
Sa.Ii Debi
78
SUPREME .COURT REPORTS
[1957]
A settlor executed a deed of trust in respect of all his pr<>-
perties whereby he n1ade arrangements for the discharge of his.
debts and for the devolution of the ,eroperty on his sons. The
provisions of the deed showed that (I ) specified lots of property
were allotted to each of his two sons, (2) the present income was
to be applied for the discharge of the debts after payment of
specified sums of money therefrom by way of monthly payments
to the setdor and his sons and (3) in the event of any of the sons
dying before the termination of the trust, his interest in the
monthly payments aforesaid was to devolve on his heirs. It was
also provided that a house, L, included in the lots allotted to the
elder son (appellant) was to be subject to the right of residence of
the second son, and his heirs until a suitable house was purchased
by the appellant or his heirs and n1ade over to him. Finally it
was provided that on the liquidation of the debts and after the
death of the settler the trust was to co1ne to an end and the·
respective · lots of property including the surplus income thereof
were to devolve on the appellant and his brother or their heirs~
Some time after the execution of the deed the settlor died.
It was
contended for the appellant that under the terms of the deed of
trust his interest in the properties allotted to . him
was
only
contingerit on the payment of the debts of the settlor and the
discharge of the obligation to provide alternative accommodation
to his brother and consequently his interest could not be attached
in execution of a decree.
Held, that the appellant had a vested interest but the enjoyrucnt of the properties was restricted so long as the debts were
not discharged, and as regards the house, L, enjoymefit was
further restricted to the extent that it was subject to the right
of residence of his brother and his heirs until the obligation to
provide alternative accommodation was discharged by the appd·
lant or his heirs.
Where a compron1ise decree provides both for a personal
remedy and a charge,
the question whether the decree-holder
can
pursue the personal remedy while reserving the remedy
under the charge depends on the intention to be gathered from
the terms of the decree.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 35
of 1955.
Appeal by special leave from the judgment and
decree dated March 10, 1952, of the Calcutta High Court
in appeal from the Original Order No. 100 of 1950
arising out of the decree dated July 18, 1950, of the
Court of Subordinate Judge, Alipore, 2nd Court, m
Miscellaneous Case No. 76 of 1949.
C .. K. Daphtary, Solicitor-General for India, N. C.
Chatter;; and Suk.umar Ghose, for the appellant.
-
S.C.R.
SUPREME COURT REPORTS
79
Atul Chandra Gupta, S. C. Jana, N. C. Sen, Arun
Kumar Dutta and R. R. Biswas, for respondent No. 1.
1956. November 19. The Judgment of the Court
was delivered by
JAGANNADHADAS
J.-This is an appeal by
special
leave against the judgment and decree of the High
Court of Calcutta and arises out of an application filed
by the appellant under s. 47 of the Code of Civil
Procedure in the course of execution proceedings in
the Second Court of the Subordinate Judge at Alipore,
District 24-Parganas. The facts leading thereto are as
follows.
One Ramani Kanta Roy was possessed of considerable properties. He had three sons, Rajes Kanta Roy,
Rabindra
Kanta Roy
and
Ramendra
Kanta Roy.
Rabindra died childless in the year 1938 leaving a widow,
Santi Debi. In 1934 Ramani created an endowment in
respect of some of his properties in favour of his family
deity and appointed his three sons as shebaits. After the
death of Rabindra his widow Santi Debi, instituted a
suit against the other members of the family in 1941 for
a declaration that she, as the heir of her deceased
husband, was entitled to function as a shebait in the
place of her husband. The suit terminated in a compromise recognising the right of Santi Debi as coshebait. Shor.tly thereafter, however, i.e., in the year
1944, Ramani and his
two sons, Rajes and Ramendra,
filed a suit against Santi Debi, for a declaration that
the above mentioned compromise decree was null and
void. One of the grounds on which the suit was based
was that the marriage of Santi Debi with Rabindra
was a nullity inasmuch as the said marriage was one
between· persons within prohibited degrees. During the
pendency of that suit Ramani, the
father, executed a
registered trust deed in respect of his entire properties
on July 26, 1945. The terms of that trust-deed will be
referred to presently. The eldest of the sons, Rajes,
was appointed thereunder as the sole trustee to hold
the properties under trust subject to certain powers
and obligations. After the execution of this trust deed
the father died. The exact date of his death does not
6-75 S C. India/59
v.
Sflllli Debi
Raje.t Kanta Roy
v.
Sa,,ti Debi
Ja.gannadhadas J.
80
SUPREME COURT REPORTS
[1957]
appear on the record. Some time thereafter the suit
was compromised on December 3, 1946. The material
terms of this compromise will
be set out presently.
By the said compromise Santi Debi gave up her rights
under the previous
compromise decree of 1941 and
agreed to receive for her natural life a month! Y
allowance of Rs. 475
payable from
the
month of
November, 1946. It was one of the terms of the compromise that on default of payment Santi Debi will be
entitled to realise the same by means of execution of
the decree. It appears that the monthly allowance as
aforesaid
was regularly paid up to
the
end
of
February,
1948,
and
that
thereafter payment
was
dafaulted.
Consequently Santi Debi filed
an application for execution on July 8, 1949, to realise the
arrears of her monthly allowance from March, 1948, to
July, 1949, amounting to Rs. 8,075 against both the
brothers, Rajes and Ramendra.
Execution was asked
for by way of attachment
and sale of immovable
properties, viz., premises No.
44/2, Lansdowne Road,
Ballygunge P.S., 24-Parganas.
Rajes filed an objection
to the execution under s. 47 of the Code of Civil
Procedure on various grounds.
Ramendra has
not
filed, or joined in, any such application and has apparently not contested the execution. The present contest
in both the courts below and here is only between
Rajes and Santi Debi. An order was passed by the
_Subordinate Judge over-ruling the objections raised by
Rajes. An appeal was taken therefrom to the High
Court at Calcutta which was dismissed by its judgment
under
appeal. Hence the present appeal in which
Rajes is the appellant, while Santi Debi is the first
respondent and Ramendra is the second respondent.
The two main objections to the execution proceedings
which have been urged before us are that-(1) Under
the compromise decree which is now sought to be put
in execution, charge was created over certain properties
for the due payment of the monthly allowance and
hence as a matter of construction of the decree, the
personal remedy can be pursued only after the remedy
by way of charge is exhausted.
S.C.R.
SUPREME COURT REPORTS
81
(2) Under the terms of the deed of trust Rajes has
no attachable interest in the properties sought to
h~
proceeded against.
The first of the above contentions is raised with
reference to the terms of the compromise decree dated
December 3, 1946, and is set out in para. 14 of the
petition under s. 47 of the Code of Civil Procedure as
follows:
"That under the compromise decree in question
the decree-holder has relinquished . all her right, title
and interest in respect of all the properties left by
Ramani Kanta Roy deceased and she having agreed
to realise her dues, if any, out of a particular property
is not entitled to proceed against the properties sought
to be attached simultaneously, keeping the said security
alive.''
The material portion of the compromise decree dated
December 3, 1946, is as follows :
"(a) That the compromise decree in Suit No. 92
of 1941 of the Hon'ble High Court of Calcutta, Original
Side, is declared to be inoperative and set aside and
the defendant No. 1 would be debarred from claiming
right or relief in the said decree.
(b) That the plaintiffs abovenamed agree to pay
to defendant No. l for her natural life a monthly
allowance of Rs. 475 and the said allowance is to be
paid on and from the month of November, 1946.
( c) That the said monthly allowance of Rs. 475
is to be paid on or before the 10th day of each succeeding
month and in case of failure to pay the said monthly
allowance of four consecutive months,
the defendant
No.· 1 will be entitled to realise the amount in default
by means of execution of the decree to be passed in
terms of this petition of compromise.
( d) That the properties mentioned in the schedule
below are hereby charged for the due payment of
the said monthly allowance and the defendant No. 1
will be at liberty to realise the amount in default
against the properties charged by execution of this
decree.
II
1956
Rqjet Kanta ~
"·
Santi Debi
Jagannadhad01 J.
-·-
~es Kanta RVJ
v.
Santi De6i
82
SUPREME COURT REPORTS
(1957]
( e) That the defendant No. 1 will, at her option,
be further entitled to realise the amount in default by
appointment of Receiver for execution of this decree
over the charged properties.
..
..
..
..
..
(j) That each of the terms stated above is a consideration for the other terms.
"
..
..
.. ..
The charge above-mentioned is over property called
Bharatkhali property consisting of a number of items
in Rangpur Collectorate now in East Pakistan.
Before considering the objection raised under point
No. 1, it is right to mention that a minor objection has
been taken that, as a fact, there is no executable decree
which can form the subject-matter of execution. It is
pointed out that cl. ( c) of the compromise petition is to
the effect that "defendant No. 1 (the present respondent
No. 1) will be entitled to realise the amount in default
by means of execution of the decree to be passed in
terms of this petition of compromise" but that there is
no formal decree carrying this out and directing that
the plaintiffs therein, Rajes and Ramendra, do pay to
the first defendant therein, Santi Debi, the sum of
Rs. 475 per month. What appears to have happened
is as follows. The petition for compromise was filed on
December 3, 1946, with the prayer that the "terms of
this petition of compromise be recorded and that the
title suit mentioned above
as between the plaintiffs
and defendant No. I be disposed of in terms of this
petition of compromise and the compromise be made a
part of the decree in the same". Thereupon on. the
same date the following formal order was passed.
"This suit coming on this day for final disposal
" " it is ordered and decreed that the suit be and the
same is
he~eby decreed
on compromise
as
against
defendant No. I. That the solenama do form part of
this decree."
It is true that a formal direction in terms of the
various clauses of the compromise petition
directing
the plaintiffs to pay the monthly allowance of Ri. 475
'
S.C.R.
SUPREME COURT REPORTS
83
to the first defendant has not, in terms, been drawn
up. But there can be no doubt that this was what
was meant to be conveyed by the above mentioned
formal order in so far as it is relevant for the present
purposes. We understand that the actual decree in
this case merely showing that "the so!enama do form
part of the decree" is according to the usual practice
of courts in Bengal in all such cases and that it is
generally understood to amount to such a direction
though it is not so expressly set out. We do not consider
it necessary to express opinion as to whether that is a
correct practice.
But we do not think that ir.
this
case the execution is to be defeated on this around.
There is no indication in the judgment either ~f the
Su?ordinate Judge .or of the High Court that any such
pomt has been raised before
them.
We accordingly
overrule this objection.
As regards the first of the main points raised with
reference to the terms of the compromise decree, it is
not disputed that cl. ( c) does impose a personal obligation on the plaintiffs therein to pay to the first defendant
therein. a monthly allowance of
Rs.
475 and that,
therefore, the decree-holder is entitled to a personal
remedy. What is urged, however, is that taking els. (c)
and (d) together, the clear intention is that when any
default occurs, the decree-holder has to look for payment first to the properties charged an~ that, it is only
in the event of not being able to obtain satisfaction
out of it, that the personal obligation can be enforced.
A number of cases of the Bombay High Court have been
cited before us in support of this argument and it is
urged that where a particular fund is indicated for the
payment of a debt and is charged, the courts should
not construe an extra clause for payment simpliciter
as giving a concurrent remedy' but that in such cases
the charged fund is primarily to be looked to. It is
also urged that in such cases it is inequitable to allow
the personal remedy to be pursued in the first instance,
or, at any rate, unless the decree-holder gives up the
charge. Our attention is also drawn to the fact that
the execution petition itself under the column "Mode
1956
Raj1s Kant a Rf!!
v.
Santi Debi
J agannadhadtJJ J.
"1956
/tJffel Eo111a &y
v.
&mli Debi
]~].
84
SUPREME COURT REPORTS
[1957)
in which the assistance of
the Court 1s required"
specifically states as follows :
"Be it noted that at present the execution is not
proceeded
against
certain
immovable properties
in
Eastern
Pakistan which
are under charge for the
present amount on account of arrear maintenance and
also future maintenance due under the decree without
prejudice to her rights under the said decree. Decreeholder reserves to herself all rights and reliefs as are
not enforceable in Dominion of India in respect of the
decree."
It is pointed out that the decree-holder in terms
desires to pursue the personal remedy while reserving
the remedy under the charge. In the present case we
do not consider it necessary to deal with these Bombay
decisions cited before us or with the above contention
based thereon. For, it is not disputed that where a
compromise decree provides both for a personal remedy
and a charge, the whole question depends on the intention to be gathered from the various terms in the
compromise decree.
In our opinion, the
construction
of the two relevant clauses and the intention to be
gathered therefrom in this case are quite clear. It is
true that in one sense, els. (c), (d) and (e) of the compromise indicate certain specified properties
as
being
available to the decree-holder for realisation of any
dues either by pursuing the charge or by getting a
Receiver appointed in respect of the charged properties.
But the wording of the three clauses shows clearly that
she is not obliged to resort to these two remedies in the
first
instance. Clause ( c) says
that "the defendant
No. 1 will be entitled to realise the amount in default
by means of execution of decree." Clause (d) says that
"the defendant No. 1 wi1l be at liberty to realise the
amount in default against the properties charged."
Clause ( e) says that "the defendant No. 1 will, at her
option, be further entitled to realise the an:iount in
default by appointment of Receiver for execution of this
decree over the charged properties." It is quite clear
that cl. ( c) gives her an unqualified right to obtain
payment of the monthly allowance from the plaintiffs.
Clauses (d) and (e) give her a liberty or option to pursue
S.C.R.
SUPREME COURT REPORTS
85
the remedies specified therein. There is nothing in
these two clauses to limit, in any way, the unqualified
right that she was given under cl. ( c). Our attention
is drawn to the statement ill cl. (j) which says that
"t:ach of the terms stated is a consideration for the
other terms." What exactly is meant thereby is somewhat obscure. But
we are unable to see how that
clause affects the intention which, in our view, has to
be gathered by reading els. (c), (d) and (e) together.
We are, therefore, of the opinion that the contention
raised to the effect that the personal remedy is not
available in this case before exhausting the charged
properties, is not sustainable.
Now, coming to the second point, the contentions
raised are that, on a true construction of the terms of
the trust deed the interest of the judgment-debtor,
Raj es, ( 1) in the properties cove'red by the trust deed,
and (2) in particular, in property No. 44/2, Lansdowne
Road sought to be attached, is only a contingent one
and
hence not attachable. That a mere
contingent
interest though transferable inter vivas is not attachable
is well settled since the Privy Council decision in
Pestonjee Bhicajee v. P. H. Anderson(1 ). The question
as to whether the
interest
of the judgment-debtor,
Rajes, in this case is vested or contingent, is one not
altogether free from difficulty. But it is well to notice
at the outset that this point has not been raised in the
petition filed by the
judgment-debtor, Rajes,
under
s. 47 of the Code of Civil Procedure. What is stated
therein is merely the following :
"Under the
said
deed of trust, the judgment
debtor has no interest in the property except that of a
trustee and as such the decree holder cannot proceed
for realisation of her alleged dues against the said
property."
The objection in this form is obviously untenable
and has not been urged in any of the courts below.
Indeed, if under the trust deed the judgment-debtor
has a beneficial interest, it is not disputed that such
beneficial interest would be attachable provided it is a
(1) I.L.R. [1939) Born. 36.
1956
Rqjes Ktlllla R1!J
v.
Santi Dtb•
Jagannadllllllas J.
v.
SonJi
Debi
86
SUPREME COURT REPORTS
(1957]
v~sted interest and not a contingent
interest.
The
judgment of the executing court, however, shows that
what was dealt with there is the contention that the
interest under the trust deed was a mere expectancy
as opposed to a vested interest. The Court held that
the interest which the judgment-debtors had in the
property by virtue of the deed of trust was not a
mere expectancy. On appeal to the High Court, none
of the grounds set out in the appeal memorandum
thereto relates to this question. The High Court, however, dealt with the matter on the footing that the
question is whether the interest of thr. judgment-debtor
under the deed of trust is a vested as opposed to a
contingent interest. It does not appear to ·us th:it
that question in this form should have been allowed to
be raised. Its determination may well depend upon
the
question whether as
a fact
the
contingency
suggested has disappeared
by
virtue
of subsequent
events. However, since the point has been :illowed to
be raised and the decision of the High Court is given
on the footing of the matter beiIJg solel:i one of construction of the document, we proceed to consider it.
The main provision under which the two brothers,
Rajes and Ramendra, get any interest under the trust
deed is that contained in sub-els. (a) and (b) of cl. 12,
which are as follows :
"12. On the liquidation of all the debts of the
settlor (including the debt, if any, that may be incurred
by the trustee for payment of the settlor's debts) and
after his death this trust shall come to an end and the
properties described in Schedule 'A' shall devolve as
follows:-
(a) The properties being Lot f, Lot II, Lot III,
and Lot IV described in tl,e said Schedule 'A' hereunder written including the surplus income thereof
shall <levolv~ on the said Rajes Kama Roy absolutely
or if he be then dead then the said properties shall
devolve on his heirs then living absolutely but subject
to the provisions contained in clause ( c) hereof regarding
premises No. 44/2, Lansdowne Road " " *
S.C.R.
SUPREME COURT REPORTS
87
(b) The properties being Lot V described ill the
said
Schedule
'A' hereunder written including the
surplus income thereof shall be enjoyed by the said
Rarnendra Kanta Roy during his lifetime or if he be
then dead then the said properties shall devolve on his
son or sons if any absolutely but if there be no son
living at that time
and
if
there
be
a grand-son
(son's son) or grand-sons then on such grand-son or
grand-sons absolutely.
* * *."
They show that Lots I to IV in Schedule A ultimately
go to Rajes and Lot V alone goes to Ramendra.
But
the interest which either of these is to get in the
properties allotted to each is expressed to be one which
each will get after the trust comes to an end. Now,
it is only after the happening of the two events, viz.,
( 1) the discharge of all the debts specified in the
schedules (including the debts, if any, that may be
incurred by the trustee
for payment of the settlor's
debts), and (2) the death of the settlor himself, that
the trust comes to an end and it is on the trust
coming to an end that the sons get the properties
allotted to them.
It was
recognised
in
arguments
before
us
that the death of
the
settlor
is
not
by any means an uncertain event and that, therefore,
this involves no element of contingency. But what
was urged is that the discharge of the debts is an
uncertain event in the sense that neither the factum
nor the time of such discharge is one that can be predicated with any certainty and that since the interest
which the two brothers take is to be only after such
-discharge their respective interests therein are contingent. It is pointed out that the settlor was very
particular about the property not going into the hands
'Of the two sons for their enjoyment as owners until
after the debts are liquidated and that this is emphasised in various clauses of the trust deed. It is urged that
this clearly shows the intention of the settlor to be that
the discharge of the debts should be a condition precedent for the vesting in them of any interest in the
properties. Thus cl. 3 of the trust deed imposes a
'Specific obligation on the trustee that "he sliall pay
Rajes Kanta RO)'
v.
Santi Debi
Jagannadlwdas].
1956
Ra.fas Kanta R.y
v.
Santi Debi
88
SUPREME COURT REPORTS
[1957}
the present existing just debts of the settlor." Clause 5
says that "during the lifetime of the settlor and so
long as all the debts of the settlor be not paid off the
trustee shall pay monthly and every month Rs. 1,000/-
to the scttlor,
Rs. 300/- to Rajes and Rs. 200/-
to
Ramendra." In cl. 6 it is stated that "on the death
of the settlor before the liquidation of his debts the
trustee shall pay to Rajes Rs. 800/- and Rs. 700/-
to
Ramendra per month." By virtue of these two clause~
a sum of only Rs. 1,500/- out of the income is set aside
for the benefit of the members of the family and hence
by implication the rest of the income is to be applied
towards discharge of the debts. Clauses 8 and 9 provide for payments out of the income in the event of
death either of Rajes or of Ramendra before the liquidation of debts. Clause 10 provides for residence of the
family as long as debts are not fully paid off. Clause 11
authorises the trustee to sell, mortgage, or give a long
lease of any of the properties for payment of the debts.
Clauses 12 (a) and (b) proceed on the assumption that
the surplus income (after payments therefrom as pru--
vided)
is
to be accumulated so long as
the trust
continues, i.e., debts are not discharged. Quite clearly,
therefore, during the subsistence of the trust both the
sons get only a portion of the income as specified above
and do not get for themselves the full benefit out of
the properties respectively allotted to them until the
debts are completely discharged. There is no doubt
that these terms show that the settlor attached great
importance to the discharge of the debts becoming an
accomplished fact before the two sons take the full
benefit by way of devolution of the property and that
in order to facilitate the same he restricted his own
enjoyment and that of his two sons to an aggregate
limited sum of Rs. 1,500/- per month out of the income
(apart from a few other minor monthly payments).
But can it be said that their interest in the property
was made to depend on the event of the total discharge·
of the debts and that the discharge of the debts was
contemplated as an uncertain event.
The determination of the question as to whether an
interest created by such a deed is vested or contingent
S.C.R.
SUPREME COURT REPORTS
89
has to be guided generally by the principles recognised
under ss. 19 and 21 of the Transfer of Property Act,
1882, and ss. 119 and 120 of the Indian Succession
Act, 1925. The learned Judges of the High Court
relied on illustration ( v) to s. 119 of the Indian Succession Act and the decision in Ranganatha Mudaliar v.
A. Mohana Krishna Mudaliar(1 ). The learned SolicitorGeneral appearing for the appellant before us has urged
that there is no such inflexible rule of law as is assumed
by the High Court, viz., that "in spite of a clause
requiring payment of debts before the property reaches
the hands of the donee, the gift is a vested one." He
drew our attention to the fact that both s. 19 of the
Transfer of Property Act and s. 119 of the Indian
Succession Act clearly indicate that if "a contrary
intention appears" from the document that will prevail.
He has also drawn our attention to the case in Bernard
v. Mountague( 2 ) in which it was held, on a construction
of the terms of the trust, that the payment of the debts
was a condition precedent to the vesting of the interest
devised therein. How, such a matter, as the one before
us, is treated in English law when it arises, appears
from the following passages in the recognised textbooks. Williams on Executors and Administrators (13th
Ed.), Vol. 2, at p. 658, states one of the two rules of
construction to be that where the bequest is in terms
immediate, and
the payment alone
postponed, the
legacy is vested. He states a number of exceptions to
that rule and says the rule itself is always subservient
to the intentions of the testator, and that the exception may be found in operation in cases where the
testator has shown a clear intention that the legacies
shall not vest till his debts are satisfied. The learned
Solicitor-General relies also on a similar passage from
Jarman on Wills (8th Edn.), Vol. II, at p. 1390, which
states as follows :
"So, where a testator clearly expressed his intention that the benefits given by his will should not vest
till his debts were paid, * * * the intention was carried
( 1) ( 1926) A. I.R. 1926 Madras 645.
(2) [1816] 1 Mer. 422 ; 35 E.R. 729.
1956
Rajes Kanta Rr>y
v.
SantiDedi
Jagannadhadas J ~
1956
Rqju Ranta Roy
v.
Santi Deh"i
JagannadliadaJ ].
90
SUPREME COURT REPORTS
[1957]
into execution, and the vesting as well as payment
was held to be postponed."
But it is to be noticed that at p. 1373 in , Jarman on
Wills (8th Edn.), Vol. II, it is also stated as follows :
"It was at one period doubted whether a devise to
a person after payment of debts was not contingent
until the debts were paid; but it is now well-established
that such a devise
confers an
immediately
vested
interest, the words of apparent postponement being
considered only as creating a charge."
Apart from any seemingly technical rules which may
be gathered from English decisions and text-books on
this subject, there can be no doubt that the question
is really one of intention to be gathered from a comprehensive view of all the terms of a dornment. The
learned Solicitor-General frankly
admitted
this,
and
also that a Court has to approach the task of construction in such cases with a bias in favour of a vested
interest unless the intention to the contrary is definite
and clear. It is, therefore, necessary to consider the
entire scheme of the deed of trust in the present case,
having regard to the terms therein, and to gather the
intention · therefrom.
By the date the settler executed the deed of trust he
had his two sons, Rajes and Ramendra and the widowed
daughter-in-law,
Santi Debi,
the
validity
of
whose
marriage he was disputing. One of the main purposes
of the trust deed, as appears from its preamble is to
give the property to his two surviving sons, Rajes and
Ramendra, after excluding his widowed daughter-mlaw, Santi Debi, against whom he had developed
prejudice on account of hers being ~ sagotra marriage.
An equally important purpose of the trust was the
discharge of his debts. For that purpose he made the
following arrangements. ( 1) The entire property was
constituted a trust for the discharge of the detbs and
thereby he divested himself entirely of any interest
therein or
management
thereof; (2) The properties
were to be in the management of his eldest son, Rajes,
as the trustee thereof with powers of alienation for
payment of debts; and (3) The use of the income for
S.C.R.
SUPREME COURT REPORTS
91
the sustenance of himself and his sons was limited to
specified amounts thereof, viz., Rs. 1,500/ per mensem in
order that the debts may be methodically and speedily
discharged. There is no evidence before us as to what
the total income of the property at the time was and
whether there would have been any substantial surplus
available from
the
income
for the
discharge
of
debts.
But Sch. A of the trust deed shows that the
properties were fairly
considerable and schedule
B
shows that the debts at the time were to the tune of
Rs. 2,62,169-8-0. Clause 17 of the trust deed values
the properties at rupees five lacs for the purposes of
stamp duty and it may
reasonably be assumed that
the value would have been substantially higher. There
can be no reasonable doubt that the settlor did contemplate that, on a proper management of the property
and with a scheme for the discharge of debts, there
would emerge surplus income by the date of termination of trust. This appears from cl. 12(a) of the trust
deed which specifically provides for the disposal of the
surplus income of each lot which might accumulate
during the continuance of the trust. It is, permissible,
therefore, to
think that the
surpluses contemplated
would not be unsubstantial. Under cl. 14 of the trust
deed the settlor provides for
the devolution of the
trusteeship in case his son. Rajes, died before the liquidation of the debts and says that on the death of
Rajes, Rajes's wife and Ramendra are to become joint
trustees and that on the death of either of them the
surviving trustee shall be the sole trustee. There is no
provision for any further devolution of trusteeship in
the contingency of such sole trustee also dying . before
the liquidation of the debts. The absence of anv such
provision may well be taken to indicate that, in the
contemplation of the settlor, the debts would be discharged and the trust would come to an end, in any
case, before the expiry of the three lives mentioned
therein, i.e., Rajes, his wife and Ramendra.
While,
therefore, the settlor does appear to have attached
considerable importance to the liquidation of debts,
there is nothing to show that he was apprehensive that
the
debts
would remain
undischarged
out of
his
1956
Rajes Konty. RU,J
v.
Santi Debi
]agannadha<las J.
1956
Rajer Kanta Roy
v.
Santi Debi
Jaganndhadas J.
92
SUPREME COURT REPORTS
(1957]
properties and its income and that he contemplated the
ultimate discharge of his debts to be such an uncertain
event as to drive him to make the accrual of the
interest to his sons under the deed to depend upon the
event of the actual discharge of his debts. In this
con text there are also other provisions in the trust deed
which are of great significance.
1. The two sons, Rajes and Ramendra, are not completely excluded from any benefit out of the settlor's
estate until the debts are discharged and the trust
comes to an end. It is provided that each of them has
to be paid a specific amount per month out of the properties, i.e., Rs. 300/- and Rs. 200/- during the settlor's
lifetime and Rs. 800/- and Rs. 700/- after the settlor's
death.
2. It is further provided that on the death of either
of these two sons before the debts are discharged and
the trust comes to an end, the above amounts are to
go to their respective legal heirs (subject to some minor
variations so far as it relates to Ramendra's heirs).
The provision in this behalf, so far as Raj es (with
whose interest alone we are now concerned) shows that
on his death during the continuance of the trust the
amount payable to him monthly was to be paid to his
widow and on her death to his legal heirs.
3. The most significant provision in this context is
that under cl. 12(a) which, while allotting lots I to IV
to Rajes and lot V to Ramendra, specifically provides
also that surplus income thereof, i.e., such income as is
referable to those lots, should devolve on the two sons
in the same way. A reference to Sch. A shows that
these lots are unequal and hence in the normal course,
if there had been no such specific provision, the surplus
income would have been equally divisible. The fact
that the surplus incomes of the specified lots is a;so to
devolve along with those specified lots themselves, is
a clear indication that the corpus of these lots was earmarked for the two sons
with the present income
thereof but with a restriction on the enjoyment of the
present income to specified sums, so as to facilitate
·orderly discharge of the debts.
S.C.R.
SUPREME COURT REPORTS
93
Now, there can be no doubt about the rule that
where the enjoyment of the property is postponed
· but the present income thereof is to be applied for the
benefit of the donee the gift is vested and not contingent.
(See Explanation to s. 19 of the Transfer of Property
Act, Explanation to s. 119 of the Indian Succession
Act. See also Williams on Executors and Administra··
tors, 13th Ed., Vol. 2, 663, para. 1010, and Jarman
on Wills, 8th Ed., Vol. II, p. 1397). This rule operates
normally where the entire income is applied for the
benefit of the donee. The distinguishing feature in this
case is that it is not the entire income that is available
to the donees for their actual use but only a portion
thereof. But it is to be observed that according to the
scheme of the trust deed, the reason for limiting the
enjoyment of the income to a specified sum thereof, is
obviously in order to facilitate and bring about the
discharge of
the debts.
As
already explained the
underlying scheme of the trust deed . is that the enjoyment is to be restricted until the debts are discharged.
Whatever may be said of such a provision where a
donee is not himself a person who is under any legal
obligation alittnde to discharge such debts, the position
in this case is different. The two sons are themselves
persons who, if the settlor died intestate, would be
under an obligation to discharge his debts out of the
properties which devolve upon them. It is only the
surplus which would be legally available for division
between them. In such a case, the balance of the
income is to be applied for the benefit of the donees
of the debts is also an application of the income for
the benefit of the donees. It follows that the entire
income is to be applied for the benefit of the donees
and only the surplus, if any, is available to the donees.
Hence the provision in the trust deed that lots I to IV
are to devolve on Rajes and lot V on Ramendra and
that the surplus income of each of these lots after the
discharge of the debts is also to devolve in the same
way, clearly operates as nothing more than the present
allotment of !hese properties themselves to the donees
subject to the discharge of debts notionally in the same
proportion. Thus, taking the substance of the entire
1956
Rajes Kanta RqJ
v
Santi Debi
Jagannadhat!as ] •
1956
&ffes Kanta Roy
v.
Santi Debi
]apnnadhadas].
94
SUPREME COURT REPORTS
[1957)
scheme of this division between the two sons the position that emerges is as follows. ( l) Specified lots are
ear-marked for each of the two sons_ (2) The present
income out of those lots is to be applied for the discharge
of the debts after payment of specified sums therefrom
by way of monthly payments to the two sons and presumably such application is to be notionally pro rata.
(3) Any surpluses which remain from out of the income
of each of the lots are to go to the very person to whom
the corpus of the lot itself is to belong on the termination of the trust. (4) In the event of any of the two
sons dying before the termination of the trust, his
interest in the monthly paymetns out of the income is
to devolve on his heirs.
These
arrangements taken
together clearly indicate that what is postponed is not
the very vesting of the property in the lots themselves
but that
the
enjoyment of the income
thereof
is
burdened with certain m(mthly payments and with the
ubligation to discharge debts therefrom notionally pro
raia, all of which taken together constitute application
ot the income for his benefit_
It may be noticed at this stage that one of the features
of a contingent interest is that if a person dies before
the
contingency
disappears
and
before
the
vesting
occurs, the heirs of such a person do not get the benefit
of the gift. But the trust deed in question specifically
provides
in the case of Rajes-with whose
interest
alone we are concerned-that even in the event of his
death it is his heirs (then surviving) that would take
the interest. It has been urged that the provision in
cl. 12(a) in favour of the heirs then surviving is in the
nature of a direct gift in favour of the heir or heirs
who may be alive at the date when the contingency
disappears. But even so, this would make no practical
difference. It is to be remembered that in this case the
parties belong to the Dayabhaga school of Hindu Law
-and this is admitted before us.
It is
also to be
remembered that up to the third degree in the male line
the principle of representation under the Hindu Law
operates.