PETITIONER: MARSHALL SONS & CO. [INDIA] LTD. Vs. RESPONDENT: INCOME TAX OFFICER DATE OF JUDGMENT: 27/11/1996 BENCH: B.P.JEEVAN REDDY, SUHAS C.SEN ACT: HEADNOTE: JUDGMENT:

J U D G M E N T B.P. JEEVAN REDDY, J.

These appeals are preferred by <ORG> [hereinafter referred to as the "Holding Company"] as successors to <ORG> [hereinafter referred to as the "Subsidiary Company"] against the judgment and order of <ORG> dismissing the writ petitions filed by them. The matter arises under the Income Tax Act .

<ORG> had its registered office at 33-A, Chowranghee Road, Calcutta while <ORG> had its registered office at Madras. For the purposes of assessment under the Income Tax Act , while the accounting year of <ORG> was the year ending on 30th June, the accounting year of <ORG> was the calendar year. On 1st December, 1982, two letters were addressed by <ORG> to the Income Tax Officer stating that the company is desirous of effecting a change in the accounting year. They stated that they would wish to close their accounts on June 30, 1983 for the eighteen months' period [January 1, 1982 to June 30, 1983] instead of closing the accounts on December 31, 1982. It was also stated that since the accounting year of <ORG> ends on June 30, they too would like to follow the same practice. In response to said letters, the Income Tax Officer asked for certain particulars which were supplied. On February 3, 1983, the Income Tax Officer permitted <ORG> to change the accounting year from December 12, 1982 to June 30, 1983 subject to the conditions mentioned therein, viz.:

"As a consequence to the change, the income of the period of 18 months from 1.1.82 to 30.6.83 will be assessed for the asstt. year 1984-85. Any relief that may be withdrawn in the future legislation with effect from asstt. year 1984- 85 will be made applicable to the entire income for the asst. year 1984-85 and depreciation will be allowed proportionately as per rules.

The asstt. year 1983-84 which is slipped on account of the change of the previous year will, however, be treated as one assessment year for the purposes of set off of carried forward losses, relief u/s.80J of the Income Tax Act, 1961, if any."

In December, 1982, <ORG> passed a resolution proposing to amalgamate with <ORG> with effect from January 1, 1982. An application was made to <ORG> and pursuant to the orders of the Court, a meeting of the shareholders was held on February 11, 1982 whereat a resolution was passed approving the amalgamation of <ORG> with <ORG>, similar resolution was passed by the shareholders of <ORG> on May 7, 1983. <ORG> [Madras <ORG>] sanctioned the scheme of amalgamation by its order dated November 21, 1983 in C.P. No.23 of 1983. On a similar application filed before <ORG>, C.P. No.284 of 1983, that <ORG> [Company court] to sanctioned the scheme of amalgamation by its order dated January 11, 1984. In both the orders,it was directed that certified copies of the said orders shall be delivered to the Registrars of Companies at Madras and Calcutta within thirty days therefrom. Accordingly, certified copies of the orders were filed before the Registrars of Companies on January 29, 1984 at Madras and on February 24, 1984 at Calcutta. The name of <ORG> was struck off the register of Companies, maintained by the Registrar of Companies at Madras, on January 21, 1986.

On November 25, 1984, a notice under Section 139(2) of the Income Tax Act was issued to <ORG> calling upon it to file a return of its income for the Assessment Years 1984-85 [for the year ending June 30, 1983] and for 1985-86 [year ending June 30, 1984]. <ORG> replied stating that inasmuch as <ORG> has been amalgamated with <ORG> under a scheme of amalgamation sanctioned by <ORG> and Calcutta and because the said amalgamation was with effect from January 1, 1982, there was no question of <ORG> filing a return for the said two assessment years. There was exchange of notices/replies thereafter, which it is not necessary to mention at this stage Ultimately, the Income Tax Officer issued a notice under Section 142(1) asking for compliance with it by February 7, 1986. At that stage, the appellant-company filed writ petitions in <ORG> questioning the aforesaid notices.

In the writ petitions filed by the appellant, the main ground urged was that inasmuch as the amalgamation has taken effect on and from January 1, 1982, the Income Tax Officer had no authority to call upon <ORG> to file a return for any period subsequent thereto. It was submitted that the scheme of amalgamation has been sanctioned by the Company Courts at Madras and Calcutta and that, therefore, any business which may have been carried on by <ORG> subsequent to January 1, 1982 was as an agent of <ORG> and not on its own account. It was submitted that <ORG> had no income of its own - indeed no existence of its own in law on or after January 1, 1982. In the counter-affidavit filed by the Income Tax Officer, he submitted that the amalgamation became effective only when it was sanctioned by the Court and after certified copies of the orders of the Courts were filed with the Registrars of Companies. His case was that only when the name of <ORG> was struck off the register by the Registrar of Companies, Madras that <ORG> can be said to have ceased to exist. The respondent also stated that, as a matter of fact, the relevant clauses in the scheme of amalgamation themselves indicate that the scheme was to take effect only when sanctioned by the court and only when the shares of <ORG> are allotted to members of <ORG>. He submitted that this allotment of shares took place only in June, 1984. The Income Tax Officer further submitted in his counter affidavit that the said amalgamation was a device adopted to evade the tax legitimately due from <ORG>. He submitted that while <ORG> was incurring losses, <ORG> was making substantial profits and that the scheme of amalgamation was merely a device to avoid paying taxes on the income earned by <ORG>. The idea behind the amalgamation, according to him, was to set off the accumulated losses of <ORG> against the profits of <ORG>. He also raised objection with respect to the maintainability of the writ petition on the ground inter alia that the Income Tax Act provides adequate remedies to agitate all the contentions urged in the said writ petition.

<ORG> dismissed the writ petition with the following findings:

(1) The date of amalgamation [January 1, 1982] specified in the scheme of amalgamation is "totally artificial and arbitrary". Till the beginning of December 1982, the amalgamation was not even in the contemplation of either company. Only in December 1982, was the resolution of the Directors passed proposing amalgamation. The shareholders meeting took place sometime in February 1983. The scheme itself contemplates that it is subject to and conditional upon the scheme being sanctioned by the court under Section 391 of the Act and appropriate orders being made for implementation of the said scheme under Section 394 . The scheme also provides that its implementation is conditional upon the shareholders holding not less than 9/10th in value of the shares in <ORG> becoming shareholders of the transferee company. In this view of the matter, specifying the date of amalgamation as January 1, 1982 has no relevance or meaning. The amalgamation becomes effective only when the <ORG> approves the scheme of amalgamation and not at any earlier point of time. In other words, the operative dates would be January 20, 1984 and February 24, 1984, on which dates the Madras and Calcutta High <ORG>s approved the scheme. There is nothing in the orders of <ORG>s to show that the said orders were to be effective from January 1, 1982.

(2) From the counter-affidavit, it appears that <ORG> was borne on the register of companies upto January 21, 1986. This shows that the company was in existence till that date and that it did not cease to exist, as a fact, on January 1, 1982.

(3) In view of the aforesaid findings, it is not necessary to go into or express any opinion on the plea of the Income Tax Officer that the said amalgamation was merely a device to evade the payment of taxes legitimately due on the income of the Subsidiary Company. For the same reason, no opinion need be expressed on the objection of the Income Tax Officer with respect to the maintainability of the writ petition.

<NAME>, learned counsel for the appellant, urged a number of grounds in support of his attack upon the validity of the judgment under appeal. He submitted that the view taken by <ORG> in <CITATION> [(1963) 49 I.T.R. 956], which has been followed in the judgment under appeal does not represent the correct view of law. He submitted that the contrary view taken by <ORG> in <CITATION> [(1983) 140 I.T.R.304) (and followed in later decisions of that <ORG>) represents the correct view. In other words, the contention is that inasmuch as both the Madras and Calcutta High <ORG>s [Company <ORG>s] had approved the scheme of amalgamation as it stood, it means that the scheme of amalgamation is effective from January 1, 1982. No doubt, the scheme states that it is conditional upon being sanctioned by the <ORG> but that only means that whenever it is sanctioned by the <ORG>, the scheme as approved takes effect. The scheme specifically states that the scheme of amalgamation is effective from January 1, 1982. Learned counsel submitted that according to the well- accepted practice prevailing in this country, all schemes of amalgamation specify a particular date of amalgamation and unless the court specifies otherwise, the date provided in the scheme of amalgamation is taken as the actual date of amalgamation. Counsel submitted that subsequent to January 1, 1982, <ORG> may have carried on business awaiting the orders of the <ORG> but it could not do otherwise and that the business so carried on by it was as an agent of and for and on behalf of <ORG> and not on its own account. Learned counsel also submitted that no balance-sheet was drawn for any period subsequent to January 1, 1982 for <ORG>. No Annual General Body Meeting of shareholders was held of <ORG> after the said date and that, to all intents and purposes, <ORG> ceased to exist as an independent entity on and from January 1, 1982. Counsel relied upon the language of Sections 391 and 394 and on certain decisions in support of his contention. <NAME> raised an alternate contention too, viz., if for any reason, it is held that the amalgamation is not effective with effect from February 1, 1982, it must be held to be effective from February 11,1983/May 7, 1983 [the date on which the shareholders' meetings were held]. Both these dates are prior to June 30, 1983 - the last day of the accounting year [as sanctioned by the Income Tax Officer]; since the income of the company can be said to accrue only at the end of the year when the accounts are made up - and not from day to day - it must be held that no income accrued to <ORG> at the end of the said accounting year [January 1, 1982 to June 30, 1983]; the income accrued only on June 30, 1983 and it accrued only to <ORG>.

On the other hand, Dr. <NAME>, learned counsel for the <ORG>, supported the reasoning and conclusion of <ORG>. Learned counsel further submitted that the scheme of amalgamation was a mere device to evade the payment of taxes lawfully due according to law and that this is a good ground on which the Income Tax authorities can ignore the alleged amalgamation even if for any reason it can be held that it is effective from January 1, 1982. Counsel also submitted that the writ petition filed by the appellant ought to have been dismissed summarily on the ground that it was premature and that the appellant should have been directed to pursue the remedies provided by the Income Tax Act according to law. <ORG>, he submits, ought not to have entered into the merits of several contentions raised by the appellant, all of which can be more satisfactorily gone into after the assessments are made wherein all the relevant facts could have been gathered.

Let us first examine the position obtaining in this behalf under the Companies Act . Sub-sections (1). (2) and (3) of Section 391 (relevant for our purpose) and Section 394 read:

"S. 391. Power to compromise or make arrangements with creditors and member.- (1) Where a compromise or arrangement is proposed--

(a) between a company and its creditors or any class of them; or

(b) between a company and its members or any class of them; the <ORG> may, on the application of the company or of any creditor or member of the company, or in the case of a company which s being wound-up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the <ORG> directs.

(2) If a majority in number representing three-fourths in value of the creditors, or class of creditors, or members, or class of members, as the case may be, present and voting either in person or, where proxies are allowed under the rules made under section 643 , by proxy, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the <ORG>, be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also on the company, or, in the case of a company which is being wound-up, on the liquidator and constributories of the company: Provided that no order sanctioning any compromise or arrangement shall be made by the <ORG> unless the <ORG> is satisfied that the company or any other person by whom an application has been made under sub-section (1) has disclosed to the <ORG>, by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest auditor's report on the accounts of the company, the pendency of any investigation proceedings in relation to the company under sections 235 to 251 , and the like. (3) An order made by the <ORG> under sub-section (3) shall have no effect until a certified copy of the order has been filed with the Registrar.

S.394. Provisions for facilitating reconstruction and amalgamation of companies.--(1) Where an application is made to the <ORG> under section 391 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the <ORG>--

(a) that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies; and

(b) that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme (in this section referred to as a `transferor company') is to be transferred to another company (in this section referred to as `the transferee company');

the <ORG> may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all or any of the following matters:-

(i) the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of any transferor company;

(iii) the allotment or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person;

(iii) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company:

(iv) the dissolution, without winding-up of any transferor company;

(v) the provision to be made for any persons who, within such time and in such manner as the Court directs, dissent from the compromise or arrangement; and

(vi) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out:

Provided that no compromise or arrangement proposed for the purposes of, or in connection with, a scheme or the amalgamation of a company, which is being wound-up, with any other company or companies, shall e sanctioned by the <ORG> unless the <ORG> has received a report from <ORG> or the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest: Provided further that no order for the dissolution of any transferor company under clause (iv) shall be made by the <ORG> unless the Official Liquidator has, on scrutiny of the books and papers of the company, made a report to the <ORG> that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest.

(2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of, the transferee company; and in the case of any property, if the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect.

(3) Within thirty days after the making of an order under this section, every company in relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration.

If default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.

(4) In this section--

(a) `property' includes property, rights and powers of every description; and `liabilities' includes duties of every description; and `liabilities' includes duties of every description; and

(b) `transferee company' does not include any company, other than a company within the meaning of this Act; but `transferor company' includes any body corporate, whether a company within the meaning of this Act or not."

Section 394-A provides that on every application under Section 391 or Section 394 , the <ORG> shall give notice of such application to <ORG> and shall take into consideration the representations, if any, made to it by that government before passing any order under any of the said sections. Rules 67 to 87 of the Companies [<ORG>] Rules, 1959 deal with matters provided by Sections 391 to

394. The form in which several notices contemplated by Sections 391 and 394 and Rules 67 to 87 are to be issued are prescribed in Forms 33 to 42 appended to the Companies [Court] Rules.

The effect and scheme of the above provisions, insofar as it is relevant to the facts of the case before us, may be summarised thus:

(a) Where an amalgamation of two or more companies is proposed, an application has to be made to the <ORG> for the purpose. Thereupon, the <ORG> may call the meeting of members of the companies concerned. The order of the <ORG> shall be in Form 35 prescribed by the Rules;

(b) Such notice of the meeting has to be sent individually to all the members. (The notice and the explanatory statement under Section 393 are settled by the officer of the <ORG>.)

(c) Apart from individual notices, the notice of the meeting has also to be published in such newspapers as may be directed by the <ORG>.

(d) Only when a majority of the members representing three- fourths of the value of the members present and voting, either in person or by proxy, approves the scheme, would the <ORG> proceed to sanction the amalgamation arrangement. Such an order shall bind all concerned. Of course, the <ORG> shall not sanction any such arrangement unless it is satisfied that the applicants have disclosed all material facts fully and truly;

(e) the application for confirmation made under Section 391(2) and 394 is also required to be advertised in the same newspapers in which the notice of the meeting was advertised and the notice is also required to be served on <ORG> as provided by Section 394-A .

(f) If the <ORG> is satisfied that the statutory formalities have been duly complied with and the scheme is fair and a reasonable one and beneficial to the interests of the companies and its members, the <ORG> may sanction the scheme. While sanctioning the scheme, the <ORG> may also provide for all or any of the matters specified in clauses

(i) to (vi) of sub-section (1) of Section 394 . The two provisos appended to said sub-section provide for certain pre-conditions which too have to be observed by the <ORG>. Sub-section (2) provides that where the order sanctioning the amalgamation provides for any of the matters in clauses

(i) to (vi) aforesaid, they shall take effect as provided in the order.

(g) Within 30 days of the order sanctioning the amalgamation arrangement, the company concerned shall file a certified copy of the order before the Registrar for registration. This is made mandatory by the second limb of sub-section (3) of Section 394 .

(h) The order sanctioning the scheme is required to be drawn up in accordance with Forms 41 and 42 of the companies [Court] Rules.

We may now refer to the scheme of amalgamation as passed at the meetings of the shareholders of both <ORG> <ORG>. "Transferor company" is defined to mean the "Subsidiary company" and the expression "Transferee Company" is defined to mean <ORG>". The expression "this scheme" is defined to mean "this scheme in the present form or with any modifications approved or imposed by <ORG> at Tamil Nadu and/or by <ORG> at Calcutta". The expression "the transfer date" is defined to mean "1st January, 1982" and the expression "the operative date" means the date on which the certified copies of the orders of <ORG> and Calcutta under Sections 391(2) / 394(2) of the Act shall have been filed with the Registrars of Companies in Tamil Nadu and Calcutta respectively. The expression "terminal date" is defined to mean the date immediately preceding the operative date. The scheme refers to the capital structure of the Transferor and the Transferee Companies, the object of the scheme underlying the agreement between the parties and then states:

"1. The undertaking of the Transferor company shall, with effect from and including the transfer date and without further act or deed, be transferred to <ORG> pursuant to Sections 391(2) and 394(2) of the Act and vest in <ORG> with all the estate and interest of <ORG> but subject, nevertheless, to all charges affecting the same and on the charges affecting the same and on the said date, <ORG> shall be amalgamated with <ORG>.

6. (a) The excess of the value of the net assets of the Transferor Company, based on the Balance Sheet of the Transferor Company as at the date immediately proceeding the transfer date over its Subscribed and Paid Up Capital shall, to the extent of the amount appearing as Development Rebate Reserve, Investment Allowance Reserve and Investment Allowance Reserve (Utilised) in such Balance Sheet of the Transferor Company, be the Development Rebate Reserve Investment Allowance Reserve and Investment Allowance Reserve (Utilised) to the Transferee Company.

(b) The Transferor company shall, with effect from the Transfer Date, be deemed to have carried on its business for and on behalf of <ORG>, and accordingly the Profits and Losses of <ORG> for the period commencing from the Transfer Date shall be deemed to be the profits or losses of <ORG> and shall be available to <ORG> for disposal in any manner including the declaration of any dividend by <ORG> after the Operative Date, subject to the provisions of the Act.

7. The implementation of this scheme is conditional upon this Scheme being sanctioned under Section 391 of the Act and the appropriate orders for implementation of this Scheme being made under Section 394 of the Act by the High courts of Tamil Nadu and Calcutta.

8. The implementation of this Scheme is conditional also upon shareholders holding not less than nine-tenths in value of the shares in <ORG> (other than shares already held therein immediately before the amalgamation by <ORG>) becoming shareholders of <ORG> by virtue of the amalgamation."

A reading of the above clauses of the scheme shows that according to the scheme, the entire undertaking of <ORG> shall be transferred to <ORG> with effect from the transferred date and that <ORG> shall be amalgamated with <ORG> with effect from the said date. Clause (6) states clearly that the implementation of the said scheme "is conditional upon the scheme being sanctioned under Section 391 of the Act and the appropriate orders for the implementation of this scheme being made under Section 394 of the Act by <ORG>s of Tamil Nadu and Calcutta". Clause (8) further provides that the implementation of the said scheme "is conditional also upon shareholders holding not less than nine-tenths in value of the shares in the Subsidiary company becoming shareholders of <ORG> by virtue of the amalgamation". It is one the basis of the language of clauses (7) and (8) that <ORG> has opined that the scheme takes effect only on and from the date it was sanctioned by <ORG>s of Madras and Calcutta coupled with the date on which the shareholders of <ORG> becomes the shareholders of <ORG> as provided in the sub-clauses. <ORG> has opined that the transfer date mentioned in the scheme viz., January 1, 1982 is "totally artificial and arbitrary" [for the reason that on the said date neither the company nor their shareholders had even thought of amalgamation] and that it has no legal significance. According to <ORG>, therefore, the date on which the amalgamation should be deemed to have come into being is not January 1, 1982 but January 20, 1984/February 24, 1984, on which dates the Madras and Calcutta <ORG> respectively approved the scheme. In other words, <ORG> has taken the view that in the absence of any date being specified in the order of <ORG> as the date of amalgamation, the date of the order of <ORG> [Company Courts] shall be taken as the date of amalgamation. For arriving at the said view, <ORG> followed an earlier <ORG> decision of that Court in <CITATION> [(1950) 20 Company Cases 214]. <ORG> also opined that the decision of <ORG> in <ORG> is of no assistance to the appellant. On this basis, <ORG> has upheld the validity of the notices issued by the Income Tax Officer, which notices were impugned in the writ petition, and dismissed the writ petition. The question is whether the view taken by <ORG> is correct.

Every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer shall take place. The scheme concerned herein does so provide viz., January 1, 1982. It is true that while sanctioning the scheme, it is open to the <ORG> to modify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in the facts and circumstances of the case. If the <ORG> so specifies a date, there is little doubt that such date would be the date of amalgamation/date of transfer. But where the <ORG> does not prescribe any specific date but merely sanctions the scheme presented to it - as has happened in this case - it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as "the transfer date". It cannot be otherwise. It must be remembered that before applying to the <ORG> under Section 391(1) , a scheme has to be framed and such scheme has to contain a date of amalgamation/transfer. The proceedings before the court may take some time; indeed, they are bound to take some time because several steps provided by Sections 391 to 394-A and the relevant Rules have to be followed and complied with. During the period the proceedings are pending before the <ORG>, both the amalgamating units, i.e., <ORG> and <ORG> may carry on business, as has happened in this case but normally provision is made for this aspect also in the scheme of amalgamation. In the scheme before us, clause 6(b) does expressly provide that with affect from the transfer date, <ORG> (Subsidiary Company) shall be deemed to have carried on the business for and on behalf of <ORG> (Holding Company) with all attendant consequences. It is equally relevant to notice that the <ORG>s have not only sanctioned the scheme in this case but have also not specified any other date as the date of transfer amalgamation. In such a situation, it would not be reasonable to say that the scheme of amalgamation takes effect on and from the date of the order sanctioning the scheme. We are, therefore, of the opinion that the notices issued by the Income Tax Officer (impugned in the writ petition) were not warranted in law. The business carried on by <ORG> (Subsidiary Company) should be deemed to have been carried on for and on behalf of <ORG>. This is the necessary and the logical consequence of the court sanctioning the scheme of amalgamation as presented to it. The order of the <ORG> sanctioning the scheme, the filing of the certified copies of the orders of the court before <NAME>, the allotment or shares etc. may have all taken place subsequent to the date of amalgamation/transfer, yet the date of amalgamation in the circumstances of this case would be January 1, 1982. This is also the ratio of the decision of <ORG> in <CITATION> . [A.I.R.1919 P.C.9].

Counsel for the <ORG> contended that if the aforesaid view is adopted when several complications will ensue in case the Court refuses to sanction the scheme of amalgamation. We do not see any basis for this apprehension. Firstly, an assessment can always be made and is supposed to be made on <ORG> taking into account the income of both the Transferor and Transferee Company. Secondly, and probably the more advisable course from the point of view of the <ORG> would be to make one assessment on <ORG> taking into account the income of both of Transferor or Transferee Companies and also to make separate protective assessments on both the Transferor and Transferee Companies separately. There may be a certain practical difficulty in adopting this course inasmuch as separate balance-sheets may not be available for the Transferor and Transferee Companies. But that may not be an insuperable problem inasmuch as assessment can always be made, on the available material, even without a balance- sheet. In certain cases, best-judgment assessment may also be resorted to. Be that as it may, we need not purpose this line of enquiry because it does not arise for consideration in these cases directly.

In the light of the view taken by us on the principal question, it is not necessary to consider the alternate submission urged by <NAME>.

For the above reasons, the appeals are accordingly allowed. The writ petitions filed by the appellant in <ORG> shall be deemed to have been allowed. We, however, make it clear that we have not expressed any opinion on the plea of the learned counsel for the <ORG> that the amalgamation itself is a device designed to evade the taxes legitimately payable by the subsidiary company. If the Income Tax authorities think that, they are entitled to raise this question in the proceedings under the Income Tax Act , it is open to them to do so by way of a separate proceeding according to law.

No costs.


JUDGMENT <NAME>, J.

1. This case has come before their lordships in the form of an appeal to <NAME> in Council from an order of <ORG>. On March 31, 1920, <ORG> certified that the appeal involved a substantial question of law and was otherwise a fit one for appeal to <NAME> in Council, and on July 26, 1920, <ORG> admitted the appeal and ordered notice to be given to the respondents. The question which their lordships have to consider is whether the appeal lay. For that purpose it is necessary to refer as briefly as possible to the history of the case to see if any appeal in this case to <NAME> in Council arose or was admissible.

2. The case relates to the management of a public Hindu temple at the village of Dakore which is within the jurisdiction of the Court of the District Judge of Ahmedabad, In the temple is installed the Idol of Shri Ranchhod Raiji, which is much revered by Hindus. Disputes arose as to the management of the temple and at least two suits were brought in respect of the management, one of which came on appeal to His Majesty in Council as to a scheme for the management which had been sanctioned by <ORG>. On May 14-, 1912, the <ORG>, having made some alterations in the scheme, and having advised that the scheme as altered should be affirmed, His Majesty with the advice of <ORG>) confirmed the scheme, as altered by the <ORG>, and made an Order in Council accordingly.

3. The Dakore Temple scheme so confirmed by His Majesty's Order in Council of May 14, 1912, provided, amongst other things, for the appointment of <ORG> to consist of five members who should be Hindus professing faith in <NAME>, and empowered the Committee to take the temple property into their custody and to make rules for the guidance of their business and for the management of the temple and for other purposes The purposes for which such rules might be made were specified in clause 12 of the scheme, and it was provided that the rules, when sanctioned by <ORG>, should have the same force as if they were part of the scheme.

4. Clause 20 of the scheme, as confirmed by His Majesty's Order in Council, is as follows:-

20. The provisions of this scheme may be altered, modified or added to by an application to His Majesty's <ORG> at Bombay.

5. <ORG>, having been duly appointed, framed a body of rules, as the <ORG> was empowered to do, and those rules came before Mr. <NAME>, as the District Judge of Ahmedabad, for the sanction of his <ORG>, and he, on December 5, 1914, made certain alterations in the rules, and, as altered by him, sanctioned the rules. On March 23, 1915, certain members of the Trawadi Mewada Brahmin caste, who had exercised certain rights in the temple or were otherwise interested in the management of the temple, presented to the High <ORG> of Judicature at Bombay an " Application under clause 20 of the scheme for modification of the rules sanctioned by the District Judge." To that application the managing member of the Temple <ORG> and another were made respondents, The sanction given by the District Judge to the rules was apparently considered in the High <ORG>, although erroneously, to be an order made under Section 47 of the Code of Civil Procedure, 1.908, and appeals from it were presented to the High <ORG> at Bombay, The appeals, and the application, came before a learned Judge of the High <ORG> for disposal, and he, obviously doubting that the appeals lay, said in his judgment of September 22, 1919, as follows :-

These appeals and applications relate to the rules which have been framed under clause 12 of this scheme and sanctioned in 1914 by Mr. <NAME>, the District Judge of Ahmedabad. The appeals have been filed as appeals from Orders in execration passed under clause 12 (7) of the scheme by the District Judge of Ahmedabad. We think we ought to deal with them as such as no objection has been taken. No orders need therefore be passed on the applications filed ex majors cautela as applications under clause 20 of the scheme reserving general power of interference to <ORG>.

6. Thereupon the learned Judge wrote and delivered a judgment in which he expressed his views as to the rules which had been sanctioned by the District Judge The appeals to <ORG> did not lie and should have been rejected.

7. The learned Judge should have remembered that parties cannot by acquiescence or consent confer upon a <ORG> a jurisdiction which it has not got. The High <ORG> at Bombay had power conferred upon it by clause 20 of the scheme confirmed by his Majesty's Order in Council upon an application made to it with that object to alter, modify or add to the rules sanctioned by the District Judge, but it had no other power, and that power it did not exercise; it may, however, still be exercised upon application properly made to it.

8. There was no right of appeal to His Majesty in Council from the judgments of <ORG> of April 11, 1919, and September 22, 1919, or from any decrees which were drawn up, except on the sole ground that the judgments or decrees were incompetent. The term "judgment" in the Letters Patent of <ORG> means in civil cases a decree and not a judgment in the ordinary sense. This appeal to His Majesty in Council should not have been admitted.

9. Their lordships will humbly advise His Majesty that this appeal should be allowed and the judgments or decrees beset aside, as these judgments appealed from were incompetent. There will be no costs of this appeal.


JUDGMENT <NAME>, J.

1. This appeal is directed against an appellate judgment of <ORG>, dated the 19th May, 1950, which affirmed the judgment of a single Judge of the Original Side of that Court passed on 9th February, 1949, in Suit No. 2481 of 1947.

2. The plaintiff, who is the appellant before us, is the widow of one <NAME>, a wealthy Hindu resident of Calcutta, while the defendant, who is still an infant, is the only son of <NAME> born of his first wife <NAME>, who died during the lifetime of her husband. The controversy between the parties centers round the short point as to whether the plaintiff is entitled, after the death of her husband, to act as shebait of an idol named <NAME> founded by <NAME> and his mother, either solely of jointly with the defendant, her step-son.

3. To appreciate the points that have been canvassed before us in this appeal, it will be necessary to narrate a few antecedent facts about which there is no dispute between the parties. It may be stated here that neither side adduced any evidence before the trial judge during the hearing of the case and the questions raised in the suit were argued as questions of law turning on the construction of the indenture which created the endowment as well as of the provisions of the Hindu Women's Rights to Property Act (Act XVIII of 1937 as amended by Act XI of 1938).

4. It appears that one <NAME>, who was the adoptive father of <NAME>, died on 28th of August, 1907, leaving behind him, his widow <NAME> and the adopted son <NAME>, who was then a minor. On February 11, 1910, <NAME> obtained letters of administration to the estate of the deceased <NAME> limited during the minority of the adopted son. On June 13, 1920, the widow purchased a house property in the city of Calcutta - being premises No. 14, Syakrapara Lane - out of the monies belonging to the estate of her husband, and on October 10, 1934, she conveyed the said property to <NAME> who had by that time attained majority.

5. On the very same day that this property was conveyed to <NAME>, <NAME> and <NAME> together executed an indenture, by which certain properties described in Schedules A and B of the document and including premises No. 14 Syakrapara Lane, were dedicated to deity Nitto Gopal Jew. The indenture recites that <NAME> had, with the consent and concurrence of her son, established and consecrated the said idol and located it in premises No. 14, Syakrapara Lane, and that she had been performing the worship and periodical festivals of the deity according to Hindu rites. The document lays down in detail the various rites, ceremonies and festivals of the idol that are to be performed daily or at specific periods, and the way in which the expenses necessary for these purposes are to be met from the income of the dedicated properties. A remuneration of 25 per cent. of the net income of the debutter property has also been provided for the shebait or shebaits for the time being. After declaring the various trusts, the indenture proceeds to provide for appointment of shebaits and for devolution of shebaitship in the following manner :-

"That the said Sm. <NAME> doth hereby constitute and appoint herself the shebait of the said Thakur for the during the term of her natural life and doth hereby declare that after her death her son the said <NAME> shall become the shebait of the said Thakur and after his death his wife <NAME> and after her death the heirs of the said <NAME> shall be and act as the shebait or shebaits of the said Thakur and she doth hereby declare him or them such shebait or shebaits accordingly and doth hereby direct and declare that the daily worship and other periodical festivals and ceremonies of the said Thakur should be performed by such shebait or shebaits. Provided however that in case the said <NAME> shall happen to die without any issue or without giving any authority to his wife him surviving, to adopt, then in such case it shall be competent for the said <NAME> to appoint by will or otherwise a shebait who would act as such after the death of his said wife as aforesaid but in case the said <NAME> shall happen to die without any issue the shebaitship of the said Thakur after the death of his wife shall devolve upon his heirs under the Hindu Law."

6. It is not disputed that <NAME> acted as shebait till her death in 1938 and that after her death <NAME> became the shebait. <NAME>, the first wife of <NAME>, who is referred to in the indenture as stated above, died on 14th January, 1942, leaving her infant son <NAME>, who is the defendant in the suit. Soon after her death, <NAME> married the plaintiff <NAME> as his second wife and within five months after this marriage <NAME> died on the 4th of July, 1942. The present suit was filed in <ORG> on 29th August, 1947, by <NAME> and she prayed for a declaration that she was the sole shebait of the deity under the terms of the indenture or, in the alternative, was entitled to shebaitship jointly with the defendant, she being a co-heir of her stepson under the provisions of the Hindu Women's Rights to Property Act . There was a further prayer claiming a right of residence in premises No. 14, Syakrapara Lane.

7. The written statement that was filed on behalf of the defendant denied the plaintiff's claim of shebaiti right, either exclusively in herself or jointly with the defendant, and asserted that the defendant was the sole shebait under the terms of the deed of endowment as well as under law. The defendant also contended that the plaintiff was not entitled to any, right of residence in the premises mentioned above.

8. The learned trial Judge by his judgment dated 9th of February, 1949, held that the plaintiff was neither the sole shebait of the deity nor was she entitled to claim shebaiti rights jointly with the defendant and that the Hindu Women's Rights to Property Act was inapplicable to devolution of shebaiti rights at all. It was held further that as the plaintiff was not in law the natural guardian of the defendant, she could not claim to exercise the rights of a shebait on behalf of the defendant as his natural guardian so long as the defendant remained a minor. The learned Judge held, however, that the plaintiff's claim to a right of residence in premises No. 14, Syakrapara Lane, was well-founded and she was held entitled to relief in that respect. The result was that save and except giving the plaintiff a declaration of her right of residence in premises No. 14, Syakrapara Lane, all the other prayers of the plaintiff were dismissed.

9. Against this decision the plaintiff preferred an appeal which came up for hearing before an appeal Bench of <ORG> consisting of Sir <NAME> and <NAME> The learned counsel appearing in support of the appeal did not seriously challenge that part of the decision of the trial Judge which negatived the plaintiff's claim to act as a sole shebait either under the terms of the indenture of endowment or as a guardian of the defendant during the period of his minority. The only question pressed was whether the plaintiff was entitled to be a joint shebait with the defendant. The learned Judges rejected this contention of the appellant primarily on the ground that the identical point was raised and considered by <ORG> in <CITATION> [ F.C.R. 1] and it was held there that succession to shebaitship was not in any way altered or affected by the provisions of the Hindu Women's Rights to Property Act . The appeal was thus dismissed and the plaintiff having obtained a certificate under article 133(1)(c) of the Constitution has now come up in appeal to this Court.

10. The substantial contention raised by Mr. <NAME>, who appeared on behalf of the plaintiff-appellant, is that under the clause in the indenture relating to devolution of shebaitship, the shebaitship is to go to <NAME> after the death of <NAME> and after her death it is to vest in the heirs of <NAME>. As <NAME> died during the life-time of <NAME>, the grant of the shebaiti right in her favour lapsed and the heirs of <NAME> are, therefore, entitled to come in as the next shebaits after <NAME>'s death. Who these heirs are has got to be determined according to the law in force at the time when the succession opened and under the Hindu Women's Rights to Property Act , which came into force in the year 1937, the widow of a propositus, who dies intestate, would rank as an heir along with the son and would be entitled to the same share as a son gets in the property of the deceased. It is said that as shebaitship is property, it would devolve under section 3 of the Hindu Women's Rights to Property Act upon both the plaintiff and the defendant jointly. Assuming, however, for argument's sake, that the expression "property", as used in the Hindu Women's Rights to Property Act , does not include shebaiti right, it is argued by the learned counsel that it is a well-established proposition of law that succession to shebaitship is governed by the ordinary rules of inheritance in respect to secular property under the Hindu law, and as the Hindu Women's Rights to Property Act has amended the general law of inheritance in certain matters, the same alterations must be recognised in regard to succession to shebaitship as well. A point was also raised by Mr. <NAME> - though it was not pressed seriously - that the language of the indenture would go to suggest that in the matter of succession to shebaitship the wife of <NAME> would have priority over other heirs. It is true that the document speaks only of <NAME>, the wife of <NAME> who is to come as shebait after his death; but it is argued that the word "<NAME>" is merely descriptive of the word "wife" and whoever would happen to be the wife of <NAME> at the date of his death, would be entitled to succeed to his shebaiti rights.

11. Mr. <NAME> appearing for the respondent stated at the outset that he would not dispute as a proposition of law that shebaitship is property of some kind, the devolution of which is governed, in the absence of any direction to the contrary given by the founder, by the ordinary rule of succession under the Hindu law. He contended however, that the Hindu Women's Rights to Property Act , which is a piece of special legislation enacted for a special purpose, does not use the expression "property" in a wide and unlimited sense; and it would appeal clear from the provisions of the different sections of the Act that it could not have had in contemplation, and does not purport to affect, the rules of succession relating to the special and somewhat anomalous type of property which shebaitship admittedly is. The learned counsel referred in this connection to the provisions of sections 3 and 5 of the Act as well as to the preamble which sets out its object, and considerable stress was laid upon the pronouncement of <ORG> in <CITATION> [ F.C.R. 1]. The other contention put forward by the learned counsel turns upon the construction of the relevant clause in the indenture referred to above which lay down the mode of devolution of the shebaitship, and his argument was that reading the clauses as a whole, it would be clear that the intention of the executants of the deed was that the "issue" of <NAME> would succeed to him as shebaits in the first instance and that no other heir of <NAME> basing his claim either upon general law or any special enactment would be entitled to become shebait so long as any issue of <NAME> was alive. A further question relating to the construction of the deed, raised by Mr. <NAME>, was that the words "heirs of the said <NAME>" occurring in the deed are to be construed not as words of devolution but of direct gift to the heirs under the deed and consequently the expression "heirs" must mean those who could legally claim as heirs at the time when the grant was made; and any subsequent change in the law could not affect the position.

12. We will first advert to and examine the provisions of the Hindu Women's Rights to Property Act and see whether the Act includes within its scope a property of such character as shebaitship is.

13. The exact legal position of a <ORG> may not be capable of precise definition but its implications are fairly well established. It is settled by the pronouncement of <ORG> in <CITATION> [48 I.A. 302] that the relation of a <ORG> in regard to <NAME> property is not that of a trustee to trust property under the English law. In English law the legal estate in the trust property vests in the trustee who holds it for the benefit of cestui que trust. In a Hindu religious endowment on the other hand the entire ownership of the dedicated property is transferred to the deity or the institution itself as a juristic person and the <ORG> or mahant is a mere manager. But though a <ORG> is a manager and not a trustee in the technical sense, it would not he correct to describe the <ORG>ship as a mere office. The <ORG> has not only duties to discharge in connection with the endowment, but he has a beneficial interest in the <NAME> property. As <ORG> observed in the above case, in almost all such endowments the <ORG> has a share in the usufruct of the <NAME> property which depends upon the terms of the grant or upon custom or usage. Even where no emoluments are attached to the office of the <ORG>, he enjoys some sort of right or interest in the endowed property which partially at least has the character of a proprietary right. Thus, in the conception of <ORG>i both the elements of office and property, of duties and personal interest, are mixed up and blended together; and one of the elements cannot be detached from the other. It is the presence of this personal or beneficial interest in the endowed property which invests <ORG>ship with the character of proprietary rights and attaches to it the legal incidents of property. This was elaborately discussed by a Full Bench of <ORG> in <NAME> v. <NAME> [I.L.R. 60 Cal. 452] and this decision of <ORG> was approved of by <ORG> in <CITATION> [63 I.A. 448] and again in <CITATION> [70 I.A. 57]. The effect of the first two decisions, as <ORG> pointed out in the last case, was to emphasize the proprietary element in the <ORG>i right, and to show that though in some respects anomalous, it was an anomaly to be accepted as having been admitted into Hindu law from an early date. "According to Hindu law," observed Lord <NAME> in <NAME> v. <NAME> [16 I.A. 137], 'when the worship of a Thakoor has been founded, the <ORG>ship is held to be vested in the heirs of the founder, in default of evidence that he has disposed of it otherwise, or there has been some usage, course of dealing, or some circumstances to show a different mode of devolution." Unless, therefore, the founder has disposed of the <ORG>ship in any particular manner - and this right of disposition is inherent in the founder - or except when usage or custom of a different nature is proved to exist, <ORG>ship like any other species of heritable property follows the line of inheritance from the founder.

14. Turning now to the Hindu Women's Rights to Property Act , it will be seen that the object of the Act, as set out in the preamble, is to give better rights to women in respect of property. Section 2 lays down :-

"Notwithstanding any rule of Hindu law or custom to the contrary, the provisions of section 3 shall apply where a Hindu dies intestate."

15. Section 3(1) then provides :-

"When a Hindu governed by the Dayabhaga School of Hindu law dies intestate leaving any property, and when a Hindu governed by any other school of Hindu law....... dies intestate leaving separate property, his widow, or if there is more than one widow all his widows together, shall, subject to the provisions of sub-section (3), be entitled in respect of property in respect of which he dies intestate to the same share as a son :

Provided that the widow of a predeceased son shall inherit in like manner as a son if there is no son surviving of such predeceased son, and shall inherit in like manner as a son's son if there is surviving a son or son's son of such predeceased son;

Provided further that the same provision shall apply mutatis mutandis to the widow of a predeceased son of a predeceased son."

16. Sub-sections (2) and (4) of section 3 are not material for our present purpose. Sub-section (3) lays down :-

"Any interest devolving on a Hindu widow under the provisions of this section shall be the limited interest known as a Hindu woman's estate............."

17. Section 4 lays down that the Act is not to operate retrospectively. The only other section in the Act which has been referred to in the course of arguments is section 5 which runs as follows :-

"For the purposes of this Act a person shall be deemed to die intestate in respect of all property of which he has not made a testamentary disposition which is capable of taking effect."

18. It will be seen that section 3(1) abrogates the general rule of Hindu law according to which a widow succeeds to her deceased husband's property only in default of male issue and she is now entitled to the same share as a son along with or in default of male issue. Similar rights have been given by the two provisos attached to section 3(1) to the widow of a predeceased son and also to the widow of a predeceased son of a predeceased son. Section 3(1) speaks of "any property". The expression prima facie includes, unless something to the contrary can be spelt out from the other provisions of the Act, all forms or types of interest answering to the description of "property" in law. Of course, the property must be heritable property in respect to which alone the question of succession may legitimately arise.

19. Reliance has been placed by Mr. <NAME>, first of all, upon the object or purpose for which the statute was passed. The object, as set out in the preamble, is to give better rights to women in respect to property; in other words, the object of the legislation is to confer larger rights upon women in comparison to what they enjoyed under the ordinary Hindu law. In our opinion, the preamble does not throw any light on the question as to whether the Act does or does not include within its ambit rights and interest of a shebait.

20. Mr. <NAME> next invokes in support of his contention the provisions of sub-section (3) of section 3 , which lays down that the interest devolving upon a widow under the provisions of the Act will be the limited interest known as the "Hindu woman's estate". It is argued that this distinction between the Hindu woman's estate and the unrestricted rights of a male heir can be predicated only of ordinary secular property, but this distinction is unmeaning when applies to <NAME>i right, for the nature of the interest enjoyed by a male or a female <NAME> is exactly the same. This argument does not appear to us to be at all convincing. Precisely the same thing happens when the <NAME>i right devolves upon a female heir under the ordinary law of inheritance. If a <NAME> dies leaving behind him a widow and no male issue, the widow would succeed to <NAME>ship under ordinary law but her rights in respect of the <NAME>i would be restricted in the same manner as they would have been if the successor was the son. This is because there are certain limitations and restrictions attached to and inherent in the <NAME>i right itself and they exist irrespective of the fact as to whether the <NAME>ship devolves upon a male or a female heir. But although as regards powers of alienation the disability of the male and the female <NAME>s may be identical, there is yet a distinction between them as regards the other limitation or characteristic of a Hindu woman's estate. When Hindu female heir succeeds to the property of a male propositus, she cannot transmit the interest which she inherits, to her own heirs upon her death. The property goes after her death not to her heirs but to the heirs of the last male owner. This rule applies even when the right which devolves upon a widow is the right of a <NAME>. After her death the <NAME>i right would not pass to her stridhana heirs but would go to heirs of the last <NAME> [Anuragi Kuer v. <NAME>, A.I.R. 1939 Pat. 1]. Sub-section (3) of section 3 , therefore, is of no assistance to Mr. <NAME>'s client.

21. Mr. <NAME> then contends that section 5 of the Hindu Women's Rights to Property Act affords a clear indication that the Act is intended to be applicable only to property in respect to which a testamentary disposition is possible. This section, it may be noted, was added by the amending Act XI of 1938 and the object apparently was to explain what is meant by "dying intestate". It says that for the purposes of the Act a person shall be deemed to die intestate in respect of all property of which he has not made a "testamentary" disposition which is capable of taking effect. Mr. <NAME> would read the section as qualifying the meaning of the word "property" as used in section 3(1) or rather as engrafting a limitation upon it. What he says is, that the language of the section would be wholly inappropriate if the Act is applicable to properties in respect to which, as in the case of shebaitship, no testamentary dispossession is possible. This argument, in our opinion, cannot be accepted as sound. Section 2 of the Act which has been referred to above makes the provisions of section 3 applicable only when a Hindu dies intestate. A person is ordinarily regarded as dying intestate when he has left no will disposing of his properties. A doubt might arise as to whether this Act would apply when a will was actually executed by a deceased, but for some reason or other it was incapable of taking effect and it was for the purpose of removing such doubt that this section was added by the amending Act of 1938. The language of section 5 of the Act is exactly the same as that of section 30 of the Indian Succession Act and the object underlying both these provisions appears to be identical. Mere execution of a will is not enough to exclude the operation of the Act. The will must be an operative will and if the will is void or incapable of taking effect, it would be deemed that the testator has died intestate. If the property is "non-testamentable", as Mr. <NAME> puts it, no testamentary disposition of such property is possible or could take effect in law and the testator must in such circumstances be deemed to have died intestate in respect of such property. Thus, there is nothing in any of the provisions of the Act from which an inference could be drawn that the expression "property" as used in section 3(1) has a limited or restricted interpretation and is not applicable to shebaitship, which is recognized as property in Hindu law.

22. Reference may now be made to the decision <ORG> in <CITATION> [ F.C.R. 1], upon which the learned appellate Judges of <ORG> practically based their decision. The facts of that case stripped of unnecessary details are that one <NAME> who was a resident of Madras and owned considerable properties, moveable and immoveable, both within the outside British India, died leaving behind him two widows and the widow of a predeceased son. The deceased had left a will but the legacies given by the same exhausted only a small portion of his estate so that with regard to the rest which was of considerable value he died intestate. The deceased was in possession of several trust properties in regard to which there were certain religious and charitable trusts and the direction in the will was that the management of these trusts should devolve upon his heirs. The son's widow instituted a suit in the court of the Subordinate Judge at Devakottai for administration of the estate and for partition and separate possession of a half share of the same, basing her claim upon the Hindu Women's Rights to Property Act . The suit was resisted by the two widows as well as by the executors appointed under the will of the deceased and it was pleaded, inter alia, that the Hindu Women's Rights to Property Act was ultra vires the legislature and that in any event it was not applicable as the propositus did not die intestate. The trial court held first that the Act was not ultra vires and was operative on all properties with the exception of agricultural lands and this finding was affirmed by <ORG> on appeal and also on further appeal to the <ORG> by the majority of the Judges of that Court. The second finding of the trial Judge was that the deceased died intestate with regard to a considerable amount of property and consequently the plaintiff was entitled to a half share thereof. <ORG> affirmed this finding with this variation that her claim to moveable situated outside British India was not allowed but the <ORG> reversed the decision of <ORG> on this point and restored that of the trial Judge. The other point and that is the point with which we are concerned in the present case, related to the devolution of the trust estates which were held by the testator. Both the courts below concurred in holding that these trusts should go to the heirs of the deceased under the ordinary Hindu law and that the provisions of the Hindu Women's Rights to Property Act were not attracted to the trusts. This decision was upheld by the majority of the Judges in the <ORG> and that point was actually dealt with by <NAME> in his judgment. The view expressed by the learned Judge is that the Hindu Women's Rights Property Act was intended to apply only to properties beneficially owned by the propositus and it was not applicable to rights in the nature of trusteeship. It seems to us that, property construed, this decision does not stand in the way of the appellant. In the first place, we do not know at all what he nature of these trusts was. The learned Judge observed himself in his judgment that there was little or no evidence as to the terms of the foundations in respect of any of the trusts "managed" by the deceased. This observation, taken along with the terms of the documents referred to in the judgment, would go to show that the deceased was a mere manager of the trusts and in respect of some of them at least he was the manager jointly with other persons. In <ORG>, Sir <NAME> expressly held that in no sense could the trust properties be regarded as the separate property of the testator and consequently Act XVIII of 1937 could not apply to such a case. <NAME> observed with reference to the documents relied upon by the learned counsel for the appellant that they only provided for "management by his heirs." At any rate, we have no materials to hold that in regard to the trusts that formed the subject-matter of that suit the trustees had any beneficial or personal interest in the trust properties. The indications, on the other hand, are clearly in the opposite direction. In these circumstances, no question arises in the present case of controverting the proposition of law that <NAME> purported to lay down, namely, that the Hindu Women's Rights to Property Act could not govern succession to property in respect to which the propositus had no beneficial enjoyment. It is not possible, however, to enunciate on the basis of this decision, a broad rule of law that succession to shebaitship, in which an element of beneficial or personal interest is normally involved would not be governed by the provisions of the Act. There are indeed one or two observations of the learned Judge in his judgment, not very definitely expressed, from which it is not impossible to draw an inference in favour of the respondent, but we think that they should be construed in the light of the facts and the actual decision in the case. The observation that Hindu law regards trusteeship as property for certain purposes is of a most general character and it has to be noted that not only the word "shebaitship" has not been used by the learned Judge but he does not even confine his remarks even to religious trusts. Moreover, trusteeship is not certainly equivalent to shebaitship. On the other hand, the reference made by the learned Judge to the limited objective of the Act affords an indication that he had in mind a trust of such a character where the trustee had no personal interest in the trust property. The object of the Act, as stated above, is to give better rights to women in respect of property. If a trusteeship, even if it is regarded as property, carries with it no emoluments or any beneficial interest for the trustee and consists of nothing else But a bundle of obligations and duties, it might possibly be said that the giving of share in such rights to a Hindu widow would not in any wan improve her position. But the position would be obviously different if there is a beneficial interest of a substantial kind inseparably connected with the duties of a particular office. They again, the learned Judge possibly used the expression "private property" in a somewhat loose sense as meaning personal property in respect to which the proprietor has a beneficial interest of his own. The reference to section 3(3) of the Hindu Women's Rights to Property Act is, as we have indicated already, not much helpful for the purpose of construing the Act. After all, we must take the decision as it stands and it is not right to call into aid a particular reason assigned by the learned Judge, for the purpose of carrying the decision beyond what it actually purports to lay down. We think that a very proper view of the effect of this decision of the <ORG> has been taken by a Division Bench of <ORG> in <CITATION> . There the question arose in connection with the rights associated with the office of archakatvam, which is a hereditary religious office and the holder or holders of it for the time being are beneficially entitled to enjoy the income of the endowed property. It was held that the principle laid down by the <ORG> in <CITATION> [ F.C.R. 1] has no application to a case relating to the office of archakatvan. It is pointed out by <ORG> that though the observations of the learned Judge in the <ORG> are wide, the decision proceeded only on the main ground that the Act governs succession to property beneficially owned by the propositus. In our opinion, the same reasons apply to the case of the hereditary shebait of a private debutter, particularly where, as in the present case, 25 per cent. of the net income of the endowed properties has been given to the shebait of shebaits for the time being as their remuneration. Our conclusion, therefore, is that there is nothing in any of the provisions of the Hindu Women's Rights Property Act which excludes from the scope of operation of the Act succession to shebaitship is a recognized form of property in Hindu Law.

23. Assuming that the word "property" in Act XXIII of 1937 is to be interpreted to mean property in common and ordinarily accepted sense and is not to be extended to any special or peculiar type of property, even then we think that the other contention of Mr. <NAME> is perfectly sound. Succession of shebaitship, even though there is an ingredient of in it, follows succession to ordinary or secular property. It is the general law of succession that governs succession to shebaitship as well. While the general law now been changed by reason of Act XVIII of 1937, there does not appear to be any cogent reason why the law as it stands at present should not be made applicable in the case of devolution of shebaitship.

24. The last contention of Mr. <NAME> that under the indenture itself the wife of <NAME> and <NAME> particularly has been given rights of succession to shebaitship prior to any issue of <NAME> manifestly untenable and as the learned counsel was not at all serious in pressing this point, we consider unnecessary to discuss it any further.

25. It remains for us now to advert to and consider the other contentions raised by Mr. <NAME> which depend upon the construction of the relevant clauses in the indenture. It may be stated at the outset that we are not at all impressed by the argument of the learned counsel that the words "heirs of the said <NAME>" occurring in the document are to be construed as words not of inheritance but of grant. Such construction would be against the language and the whole tenor of the document. It is to be noted that <NAME> was the owner of the dedicated properties and the real founder of the endowment. The mother was associated with him in the act of dedication because it was she who consecrated and established the deity and was looking after its worship and service since it was installed. It was in the fitness of things therefore that <NAME> should request his mother to become the first shebait and this is exactly what is recited in the indenture. After the death of <NAME>, <NAME>, the founder, himself, was to be the shebait and save and except the provision made in favour of <NAME>, his existing wife, the devolution of shebaitship has been directed to be in the line of heirs of the founder. There is no indication of any intention to treat the heirs as the objects of an independent gift. It may be noted that this identical point was raised before <ORG> in <CITATION> [ F.C.R. 1] with regard to the devolution of trust estates. The direction in the will in that case was that they should go to the heirs. It was held by <NAME> that it was not reasonable to construe such words as words of gift and not of devolution.

26. On the question of construction Mr. <NAME>'s main argument is that if the relevant provisions of the indenture dealing with devolution of shebaitship are read as a whole, it will be manifest that the executants of the deed intended that the issue of <NAME> were to have preference over other heirs in the matter of succession to shebaitship; and that an heir who is not an issue could not come in so long as an issue remained alive. The relevant portion of the document has been set out already and it provides in the first place that after the death of <NAME>, her son, the said <NAME> Mullick, shall become the shebait, after him his wife <NAME>, and after her death, the heirs of the said <NAME> Mullick shall be and act as shebaits. Then there is a proviso to the effect that if the said <NAME> shall happen to die without any issue or without giving any authority to his wife, him surviving, to adopt, then in such case it shall be competent for <NAME> to appoint by will or otherwise a shebait who would act as such after the death of the said wife; but in case the said <NAME> Mullick shall happen to die without any issue, the shebaitship of the said <NAME> after the death of his wife shall devolve upon his heirs under Hindu Law. Mr. <NAME> lays stress upon the proviso, particularly the last portion of it and it contains, according to him, a clear direction that it is only on the failure of issue that the heirs of <NAME> can come in as shebaits. In order that the proviso may be reconciled with the clause that precedes it, Mr. <NAME> invites us to hold that the word "heirs" in the previous clause should be taken to mean only the issue of <NAME>.

27. We do not think that the interpretation suggested by the learned counsel is the proper one. A proviso is normally an excepting or a qualifying clause and the effect of it is to except out of the preceding clause upon which it is engrafted something which but for the proviso would be within it. The word "heirs" cannot normally be limited to issue only. It must mean all persons who are entitled to the property of another under the law of inheritance. So far as the main provision is concerned there is nothing in the language or in the context to suggest that the word "heirs" has not been used in its ordinary or natural sense. Mr. <NAME> argues that the proviso in that case would be wholly inexplicable whereas it is a sound canon of construction that all the parts of a document should be read together and no portion is to be omitted. In our opinion, the clause that precedes the proviso lays down the general rule relating to devolution of shebaitship. The expression "heirs" has not been used in any restricted or limited sense and extends to all persons who are entitled to succeed under the law. The proviso engrafts an exception upon the general rule. What it does is to give a power to <NAME> to appoint a shebait, who would come as such after his death in the contingency of his dying without any issue and without giving any authority to his wife to adopt a son. It may be noted that the word "issue" includes both son and daughter and the power of appointment cannot be exercised by <NAME> even if he has a daughter living. The proviso thus qualifies the main provision to this extent that if the particular contingency that is mentioned here is fulfilled, <NAME> would be entitled to appoint a shebait, although no such power can be deduced from the general clause. In case the contingency does happen but the wife is not given any power of adoption and no appointment is also made by <NAME>, the consequence would certainly be that the other heirs of <NAME> would succeed as shebaits and this is what is laid down in the concluding portion of the proviso. The expression "his heirs" at the end of the proviso would certainly mean heirs other than the son and daughter of <NAME>. As <NAME> actually left a son, the contingency contemplated by the proviso did not arise at all and in these circumstances the proviso is to be ignored altogether for purposes of construction and it is not proper to attempt to spell, out of it, by implication, something which is not only not in the main provisions but is contradictory to it. We think, therefore, that this contention of Mr. <NAME> also must fail.

28. The result, therefore, is that, in our opinion, the appeal succeeds. The judgment and decree of both the courts below are set aside except the declaration of the right of residence of the plaintiff which was given by the trial court and not disturbed in appeal. In addition to that, it will be declared that the plaintiff is entitled to joint shebaitship with the defendant in respect of the <ORG> created by the indenture of October 10, 1934. We direct the taxed costs of both the parties in all the courts to be paid out of the <ORG> estate.

<NAME>, <NAME>

29. I agree with the conclusion reached by my three learned brothers in the judgment just now pronounced, but I would like to add a few words on two points on which I do not see eye to eye with them fully.

30. In support of his contention that the word "property" in the Hindu Women's Rights to Property Act cannot be construed so comprehensively as to include a shebait right, Mr. <NAME> referred to sub-clause (3) of section 3 , which speaks of "any interest devolving on a Hindu widow under the provisions of this section shall be the limited interest known as a Hindu Woman's estate"; and he urged that the conception of such an estate as distinguished from an absolute interest is inapplicable to such a right of property. This is a point that deserves some attention. In dealing with it, we are not thinking of any property endowed to the Thakur or the deity and its intrinsic legal characteristics as constituting a religious endowment. We have in mind the shebaitship itself as a species of property. Can it be postulated with reference to the shebaitship that a Hindu widow succeeding to the office has only what is known as a "Hindu woman's estate" as contrasted with a full or absolute estate taken by a male heir ? Does a male heir get higher rights than a Hindu widow ? and if so, what are they ? So far as a shebaitship is concerned, the office does not ensure beyond the lifetime of the holder, whether male or female, and is generally inalienable. It is res extra commercium. A male heir cannot alienate it any more than a female heir. What limitations exist or are imposed on alienability arises out of the nature of the property and not out of the nature of the estate taken by the heir. In the very nature of things, there can be no alienation for necessity, surrender, acceleration of the estate in favour of the next in succession, etc. Plausible and attractive is this line of reasoning, and it lends support to the view taken in <CITATION> [ F.C.R. 1] by Sir <NAME>, where, referring to sub-clause (3) of Section 3 , he observes :-

"This provision will be appropriate enough in relation to private property where the woman's estate is different from the interest taken by a male heir. But in respect of trusteeship or other similar office, the law makes no difference between the interest taken by a male heir and the interest taken by a female heir."

31. But it does not decisively outweigh the several considerations set forth in the judgment just now delivered by my learned brother <NAME> for construing the word "property" in a wider sense so as to include the shebaiti right also. It there is no legal objection to a woman being a shebait under Hindu law, there is no particular reason why she should be excluded from succeeding to the same under an Act which imposes no restriction or prohibition either in express terms, or by necessary implication.

32. The next point relates to the construction of the deed of indenture executed by <NAME> and <NAME>. I am of the opinion that the technical rules of interpretation of provisos and exceptions with reference to their scope and legal effect, adopted in construing statutes should not ordinarily be imported in interpreting deeds and documents executed by laymen, In ordinary deeds, a proviso may sometimes be in the nature of an explanation of the main clause or provision; and we must look not merely at the form of the language but its substance, the governing idea or purpose of the deed, the context and the surrounding circumstances togather the real meaning or intention of the executant. Judged in this light and adopting a broad construction, it appears to me that what <NAME> had in mind when he executed the indenture was, as made clear in the proviso, that his issue (born of his loins) or any person whom his wife may adopt on his authority, should succeed to the shebaiti in the first instance; and secondly, in default of such contingency, the shebaitship should go to any person who may be nominated in this behalf by his will; and thirdly, in default of issue (born or adopted) and in default of nomination by will (which is necessarily implied), the right was to devolve upon his heirs under the Hindu law. In other words, the proviso explains what he means by his heirs in the preceding clause. In this view, the respondent will succeed to the office in preference to the appellant.

33. But the construction placed on the indenture by my learned brothers is also a possible one and I do not desire to express any dissent from the result they have reached.

34. Appeal allowed.


<NAME>, J.

1. The respondent-Commissioner <NAME>' meats in exercise of the powers vested in him under orders of this Court attached the entire first floor of premises No. 158, Dharamtolla Street, Calcutta along with all appurtenants attached thereto under an order of attachment dated 14th April, 1987. The appellant who claimed to be the owner of the property in possession filed an objection against attachment on 24th April, 1987 before the respondent. The objection petition was forwarded by the respondent to <ORG> for adjudication.

2. <ORG> is a partnership firm of which Mr. <NAME> who is representing the same in this appeal in a partner. There is no dispute that the property in dispute belonged to this partnership firm. The case of the appellant was that though under a registered agreement dated 21st June, 1980 the appellant agreed to sell the property to <ORG> which was a partnership firm having its office at 5-6, Fancy Lane, Calcutta, the same was later on cancelled and the agreement itself has become uninforceable. The respondent Commissioner has been appointed under the order of this Court as Commissioner in respect of all <ORG> matters by various orders of this Court and it is in exercise of those powers the Commissioner attached the property now in dispute. The objection to the attachment was heard by <ORG> of <ORG> which by its order dated 7.11.1990, dismissed the appellant's plea for raising the attachment, holding that the claim of the appellant that their agreement had been cancelled and no right had accrued to <ORG> cannot be accepted. The learned Judges further directed the Commissioner to take steps to put up the property for sale by public auction.

3. It is seen from the registered agreement to sell executed by the appellant in favour of <ORG> that the appellant agreed to sell the property for a sum of Rs. 16 lacs. On the date of the agreements itself a sum of Rs. 4 lacs was paid by the <ORG> as earnest money and it is not in dispute. Subsequently on various dates the purchaser had paid a further sum of Rs. 9 lacs before 21st October, 1980 as provided in the agreement. The balance of consideration was to be paid at the time when the vendor could deliver possession of the entire first floor premises. It appears from the agreement itself that the purchaser had inspected the original documents of title and the satisfied themselves as to the title of the vendor (Appellants). As and when the vendor was in a position to deliver possession, the balance of consideration of Rs. 3,00,000 was agreed to be paid and the sale completed. The agreement further provided that the buyer shall pay the balance and take possession of the entire first floor within 15 days to the receipt of the notice received from the vendor that the premises is ready for delivery of possession.

4. The agreement further provided that if the buyer failed to pay within IS days of service of the notice as stated above the sellers shall have a right to refund to the buyer all the payments received except a sum of Rs. 1,50,000, and cancel the agreement and forfeit the sum of Rs. 1,50,000 by way of liquidated damages and the burner shall have no claim over the sellers or in respect of the property. By notice dated 13.11.1980 the appellants informed <ORG> that the first floor of the premises which they have agree to sell is ready for delivery of possession and that the buyer can take possession of the same on or before 30th November, 1980 on their payment of the full consideration. It is the case of the appellants that the said <ORG> failed and neglected to pay the balance amount and take possession of the same before 30th November, 1980 and accordingly the agreement to sell had become unenforceable and void and it was also cancelled. In order to avoid any cloud of title the appellants also filed on 28th April, 1981 suit No. 329 of 1981 on the file of <ORG> at Calcutta for a declaration that the agreement had became void and unenforceable and also for a praying for cancellation of the same. The Appellant had also filed an application for an injunction restraining the defendent-<ORG>, their agents, servants and others from in any way dealing with the property or interfering with the rights of the plaintiff-appellants. The records do not show whether any interim order was given but do show that notice was issued in that application to the defendent. It was the further case of the appellant that while the suit was pending the parties entered into a settlement by which the appellant-plaintiff agreed to return the sum of Rs. 13,00,000 received from <ORG> towards the sale consideration and also an additional sum of Rs. 50,000 and further agreed to give up their right to forfeit a sum of Rs. 1,50,000 on the default of the buyer to perform their part of the contract. In pursuance of this settlement the appellant issued an account payee crossed cheque dated 10.6.1981 for a sum of Rs. 10,00,000 drawn in favour of <ORG> on <ORG> as part payment of the refund of earnest money received under the agreement to sell dated 21st June, 1980. Admittedly that cheque was cleared and the amount was paid to <ORG>. The appellant sent another cheque for Rs. 3,50,000 in favour of <ORG> in full settlement and payment of the advances received and the additional sum of Rs. 50,000 agreed to be paid under the settlement. The <ORG> in their letter dated 18th August, 1981 informed the appellants that the cheque for Rs. 3,50,000 drawn in their favour on <ORG> Jorasanko Branch which was received by them had been misplaced and on that representation the plaintiff informed their bank about the loss of the cheque and not to honour the same if presented and at the request of <ORG> they paid a sum of Rs. 3,50,000 in cash and obtained acknowledgment of the same and also an undertaking that they shall not present the said cheque in case they trace it for encashment. It is in those circumstances the appellants filed a claim application before the Commissioner claiming that the property is not liable for attachment and for removal of the attachment.

5. The learned Judges rejected the claim on the following reasoning. There was no need for the claimants to have abdicated their right to recover or forfeit a sum of Rs. 1,50,000 if the purchaser had failed and neglected to take possession in spite of the fact that the vendor was ready and willing to deliver possession of the building in November, 1980 itself. <ORG> was also of the view that there was no need for paying the additional sum of Rs. 50,000 to the purchaser which means a total financial loss of Rs. 2,00,000 to the vendOrs. The materials on record do not show that the vendors had any immediate buyers for purchasing the property. The information about the loss of cheque for Rs. 3,50,000 by the vendor was only on the 18th August, 1981 and even if that story is true another cheque could have been issued instead of paying cash. There was no need for the purchaser to have backed out from the agreement to purchase because the property prices were going up and the vendor would have known that on the date of settlement the property would have fetched much larger money. The endorsement of cancellation in the original agreement to sell had not been registered. The settlement had also not been recorded in the suit. The learned Judges also observed that "the absurdity in the aforesaid story becomes manifest when another factor namely, existence of a debt of Rs. 21,50,000 payable by the vendor to <ORG> is taken into consideration".

6. Let us consider the last of the reasonings first. Wherefrom the learned Judges got the information that a debt of Rs. 21,50,000 was payable by the appellants to <ORG> is not clear from the records available in this case. There is absolutely no evidence to show that the appellants owed any sum of money to <ORG> at the time when the agreement to sell was executed or at the time when the agreement was cancelled and the settlement was entered into. But it appears from the counter affidavit filed in this Court that a Loan Case No. 184 of 1989 was pending before the Commissioner <ORG>. It appears that that loan case was disposed of by the Commissioner on 9.11.1991 during the pendency of this appeal and the appellant has also filed that document with an application to receive the same. We have made this order of the Commissioner dated 9.11.1991 as part of the record. In this order the Commissioner has held that there are absolutely no records to show that any amount was due from Kali Durga Estate to <ORG> and that the said claim of loan of Rs. 21,50,000 had not been proved. So the main basic ground on which the learned Judges seem to have observed as above is no longer in existence.

7. We are also not satisfied that any of the other reasonings mentioned by the learned Judges anyway go to show that <ORG> was ready and willing to perform their part of contract and the default if any was that of the vendOrs. There is no dispute about the notice dated 13.11.1980 which refers to the agreement to sell and states that building was ready for delivery of possession on or before 30th November, 1980. There is nothing on record to show that the purchaser was willing to take possession but it was not handed over. No written statement also appear to have been filed in Suit No. 329 of 1981. Under the terms of agreement if the purchasers failed to take possession within the period mentioned therein the vendor was entitled to forfeit the security deposit and the agreement itself shall stand cancelled. The learned Judges seem to be of the view that since the property prices were going up there was no need for the buyer to have agreed for the settlement and that there is a doubt about the settlement itself. The very reason that the property prices were increasing might have induced the vendor to condone the failure of the purchaser to comply with the terms and conditions and he willing to forgo his right to forefeit Rs. 1,50,000 and pay also an additional sum of Rs. 50,000. The purchaser got back the entire advances paid by him and in additional another sum of Rs. 50,000. There is nothing illogical in this attitude of both the vendor and the purchaser settling the matter. The learned Judges have proceeded on surmises and suspicion. The cheque for Rs. 10,00,000 issued on 10th June, 1980 refunding part of the advance of Rs. 13,00,000 received is admitted. <ORG> has given a letter that the cheque was realised by <ORG>. In fact the learned Judges have not stated that the said Rs. 10,00,000 was not received by the buyer <ORG>. That itself would go a long way to show that there should have been a settlement. The letter dated 18th August, 1981 sent by the said <ORG> also clearly acknowledges the receipt of the cheque for Rs. 3,50,000 but states that the cheque had been misplaced and it was on that representation and at the request of <ORG> that a cash payment of Rs. 3,50,000 was made and <ORG> also undertook not to present the cheque for payment in case they trace it later on. The learned Judges while confirming the attchment, ordered the sale of the property by public auction and directed that out of the sale proceeds to be realised a sum of Rs. 3,50,000 is to be paid to the objector appellant but they have not given any direction as to the amount of Rs. 10,00,000 refunded to them though there could not be any dispute about the payment and receipt of at least Rs. 10,00,000. A cheque for Rs. 10,00,000 was received by <ORG> and the amount was also credited to them. It is also not clear as to what this sum of Rs. 3,50,000 referred to in the order represents. If the case of the appellant had not been believed only a sum of Rs. 3,00,000 was remaining unpaid. It may also be mentioned that the agreement to sell is dated 21.6.1980; the attachment was effected on 14.4.1987 and the order was to sell the property in public auction as if it had become the property of <ORG> without any direction to the appellant to execute a sale deed in favour of the respondent. If the agreement had not fructified into a sale on what basis <ORG> would have become the owner of the property is not made clear in the judgment. These points, however, lose their importance in view of the fact that we are allowing the appeal on the ground that the agreement to sell is not enforceable and had been cancelled. Even the FIR under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 was filed only on the 13th of December, 1980 but even before that date the agreement had come to an end by non-performance of conditions of sale by the purchaser as seen from the letter/notice dated 13.11.1980 which gave time for completion by the 30th of November, 1980. This Act itself came into force only on 13th December, 1980.

8. In the circumstances we have no doubt that the judgment under appeal is liable to be set aside and accordingly we set aside the same. The appeal is allowed. The attachment made by the Commissioner <NAME> on 14.4.1987 is vacated. However there will be no order as to costs.