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PETITIONER: TRUSTEES OF SAHEBZADI OALIA KULSUM TRUST

       Vs.

RESPONDENT: THE CONTROLLER OF ESTATE DUTY, A.P.

DATE OF JUDGMENT:       03/08/1998

BENCH: SUJATA V. MANOHAR, M. SRINIVASAN

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T Mrs. Sujata V. Manohar. J.      On 21st of March, 1953, the Nizam of Hyderabad, Sir Mir Osman Ali  Khan, executed  a deed  of trust  under which  he settled certain  jewellery and other properties on trust for the benefit  of Sahebzadi  Oalia Kulsum,  his grand daughter for life  and thereafter for her children and their children for life  etc. and  ultimately for the maintenance of a holy shrine. On  the same  date, he also executed a deed of trust in favour of his daughter-in-law, Sahebzadi Anwar Begum, the wife of  second Prince  Muazzam Jah.  The terms  of the  two trust deeds are similar. For the sake of convenience, we are referring only  to the  trust deed  executed  in  favour  of Sahebzadi Oalia Kulsum.      Under the  deed of trust, the settlor who was a Muslim, created  a   trust  in  respect  of  certain  jewellery  and ornaments and  other properties for the benefit of his grand daughter oalia  Kulsum who  was given  a right  to wear  the jewellery after  her marriage or on completing the age of 30 years whichever  was earlier.  She was  allowed to  wear the jewellery and  ornaments during  her life time and after her death the  trustees were  directed to sell the ornaments and invest the  sale proceeds,  thus turning them into an income yielding investment.  A further  direction was  given to the trustees to  pay the  income to the children of Oalia Kulsum or  remoter   issue  of  Prince  Muazzam  Jah  Bahadur  from generation to generation in the ratio of two shares for male and  one   share  female   heirs.  In  the  absence  of  the contingencies mentioned above, the income was directed to be paid to  remoter issues  of Prince  Muazzam Jah Bahadur from generation to generation in the ratio of two shares for male and one  share for female. On the death of the last survivor of the  persons entitled  to the net income of the fund, the income was  directed to  be utilised  for the benefit of the holy shrine  at Khum  in Iran.  Thus the  trust was  in  the nature of  wakf-alal-Aulad. In fact the recital in the trust deed is to the same effect:      "AND WHEREAS  out of  natural  love      and  affection  which  the  settlor      bears   towards    his    relatives

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    hereinafter   mentioned   and   for      divers  other   good   causes   and      considerations him thereunto moving      he  the   settlor  is  desirous  of      making a  settlement  and  wakf-ul-      aulad  in  the  name  of  the  most      merciful God in respect of the said      articles specified  in the    First      Schedule                  hereunder      written............ for the purpose      of the  maintenance and  support of      the members  of his  family and his      descendants and  ultimately for the      religious and  charitable  purposes      hereinafter mentioned in the manner      hereinafter appearing...."      Pursuant  to  the  deed  of  trust  the  jewellery  and ornaments and  certain other  properties were transferred by the settlor as a wakf.      The settlor  Sir Mir  Osman Ali Khan expired on 24th of February,  1967.  By  an  order  passed  by  the  Additional Assistant Collector  of Estate  Duty dated  25th of January, 1973, the  properties which were the subject matter of these two trusts  were deemed to pass on the death of the deceased and were   and were treated as property passing on the death of the  deceased for the purposes of estate duty. The appeal of the  present  appellant,  however,  was  allowed  by  the Appellate Controller  of Estate  Duty by his order dated 2nd of June,  1975. In  the further  appeal to the Tribunal, the Tribunal by  its order dated 7th of July, 1976 dismissed the appeal of  the department  and confirmed  the order  of  the Appellate Controller  by  holding  that  the  value  of  the property forming  the corpus of the trust cannot be included in the principal value of the estate of the deceased.      From this  finding of  the Tribunal,  the following two questions were  referred to the High Court of Andhra Pradesh at Hyderabad:      "A: Whether on the facts and in the      circumstances of the case the trust      created   by    the   deceased   on      21.3.1953 known  as Sahebzadi Oalia      Kulsum Trust is ab initio void?      B:  Whether on the facts and in the      circumstances of  the case  and  on      the  interpretation  of  the  trust      deed the value of the corpus of the      Shabzadi  Oalia   Kulsum  Trust  is      liable  to   be  included   in  the      Principal value  of the  estate  of      late Sir Osman Ali Khan Bahadur?"      Similar questions  were referred in connection with the second trust.  The High  Court by  its impugned judgment and order dated  9th of  December, 1983 decided the questions in favour of  the revenue and against the assessee. The present appeals arise  from the  impugned judgment of the High Court dated 9th of December, 1983.      It is  contended by  the respondent i.e. the department that the  trusts created  under the  said deeds of trust are void ab  initio since they violate Sections 13 and 14 of the Transfer of  Property Act,  particularly  the  Rule  against Perpetuity  incorporated   there.  The  appellant,  however, review upon  Section 2 of the Transfer of Property Act under which it is provided, inter alia, that nothing in the second chapter of  this Act  shall be  deemed to affect any rule of Mahomedan  law.  Section  13  and  14  relied  upon  by  the

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department, form  a  part  of  the  second  chapter  of  the Transfer of  Property Act.  The appellant submits that under Mahomedan Law  it is permissible to create a Wakf-alal-aulad under which  a trust  in perpetuity  can be  created for the maintenance and  support wholly  or partially, of the family of the  settlor, his children or descendants from generation to  generation and thereafter for the benefit of poor or for any  other  purpose  recongnised  by  Mohammedan  Law  as  a religious,  pious  or  charitable  purpose  of  a  permanent character. The  provisions of  Chapter 2  of the Transfer of Property Act  which  inter  alia  embody  the  Rule  against Perpetuity applicable to transfers inter vivos, do not apply to such trusts.      Syed Ameer  Ali in  his book  on Mahommedan Law, Fourth Edition, Volume 1, page 284 stated as follows:      "When  a  man,’  says  the  Fatawai      Alamgiri quoting  the Zakhira,  has      made a  wakf of  land or  something      else with  a  condition,  that  the      whole or  part of  it shall  be for      himself while  he lives  and  after      him for the poor, the wakf is valid      according to  Abu  Yusuf,  and  the      jurists of  Balkh have  adopted his      opinion and  ruled accordingly, and      the Fatwa  is  in  conformity  with      that opinion  as an  inducement  to      the making of wakfs."      Dealing with  wakf in  favour of descendants, Ameer Ali says (p.284):      "So also  if he  should,  ’This  my      land  is   a  sadakah-mowkoofa,  he      (meaning the  mutwalli)  will  pass      the produce  to me  while  I  live,      then after  me to  my child  and my      child’s child  and their  nasl  for      ever, while  there are any and when      they cease,  to the indigent,’ This      is lawful."      (N.B. nasl = descendants)      There is  general consensus on this proposition amongst the various authorities on Islam.      The Privy Council, however, had an occasion to consider a wakf-alal-aulad  created by  a Muslim  in the case of Abul Fata Mohammad  Ishak v.  Rasamaya Dhur  Chowdhary  (1894  22 Indian Appeals  76) in which two Muslim brothers made a wakf whereby they  were the  first mutwallis  of  the  wakf.  The entire benefit of the wakf was to go to the children in  the first instance  and their  descendants  from  generation  to generation  until   the  total  extinction  of  the  family. Thereafter the  income was  to be applied for the benefit of widows, orphans, beggar and the poor. The Privy Council held that since  the bequest  to charity  was  illusory  and  too remote, the  wakfs were  not valid as they offended the rule against perpetuity.      Criticising the  decision of the Calcutta High Court in the case  of Rasamaya  Dhur Chowdhary v. Abdul Fata Mohammad Ishak ([891])  I.L.R. 18  Cal. 399)  which was  subsequently upheld by  the Privy Council in Abdul Fata Mohammad Ishak v. Rasamaya Dhur  Chowdhary (supra),  Ameer  Ali  explains  the position in  Mahommadan Law by saying that the provision for one’s children  and descendants  is regarded as a pious duty by which  nearness (kurbat)  to God is attained. The mention of the  poor is  required by Mohammad (not by Abu Yusuf with whom is  the Fatwa) not to give validity to the wakf, but to

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ensure perpetuity;  and as human beings are liable to become extinct and  as a  wakf  must  be  a  permanent  dedication, Mohammad required that the poor should be expressly named or implied by  the use of the word "sadakah". Abu Yusuf, on the other hand, held that whether the poor were named or not, or whether the  word "sadakah" was used or not, the word "wakf" implied perpetuity, and, therefore, unless some other object was named,  on failure  of the wakif’s posterity, the income would be  applied for  the poor.  There is no question about the validity  of the  wakf; the mention of the poor does not make the  wakf per  se more  or less  valid; it only ensures perpetuity insisted upon in the law (pages 296-297).      Asaf A.A.  Fyzee in  his book  "Outlines of  Muhammadan Law", Fourth  Edition at  pages 303 states that according to the  ancient  texts,  wakfs  for  the  support  of  a  man’s descendants and  family were  considered to  be  proper  and lawful. He says, " The Prophet is reported to have said that ’When a Muslim bestows on his family and kindred, hoping for reward in  the next  world, it becomes alms, although he was not given to the poor, but to his family and children.’ What in  the  estimation  of  the  English  lawyers  would  be  a pernicious perpetuity,  calculated to  aggrandize the family of the  founder, is,  according to  the shariat, the best of charities." The  position in  Islamic Law  is summed  up  by Fyzee at page 303 by quoting the words of Ameer Ali:      From the  promulgation of  Islam up      to the  present day  there has been      an absolute  consensus  of  opinion      regarding the  validity of wakfs on      one’s   children,    kindred    and      neighbours.   Practical    lawyers,      experienced judges,  high  officers      of  every  sect  and  school  under      Mussulman  sovereigns  are  all  in      unison on  this  point.  There  are      minor differences,  viz. Whether  a      wakf can be created for one’s self,      whether the unfailing object should      be designated, whether the property      should  be   partitioned  or   not,      whether consignment is necessary or      not; but  so far as the validity of      a wakf constituting one’s family or      children the       benefaction,  in      whole or  in  part,  is  concerned,      there is  absolutely no difference.      A wakf  is a  permanent benefaction      for the  good of  God’s  creatures:      the wakif  may bestow the usufruct,      but   not    the   property,   upon      whomsoever  he   chooses   and   in      whatsoever manner he likes, only it      must endure for ever. If he bestows      the usufruct  in the first instance      upon  those  whose  maintenance  is      obligatory on  him, or  if he gives      it to  his descendants  so long  as      they exist to prevent their falling      into indigence,  it is a pious act,      -  more  pious,  according  to  the      Prophet than  giving to the general      body of the poor. he laid down that      one’s family  and  descendants  are      fitting  objects  of  charity,  and      that  to  bestow  on  them  and  to

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    provide for  their future substance      is more  pious and  obtain  greater      ’reward’  than  to  bestow  on  the      indigent  stranger.   And  this  is      insisted upon so strongly that when      a wakf  is made for the indigent or      poor generally, the proceeds of the      endowment is applied to the relieve      the wants of the endower’s children      and descendants  and kindred in the      first place  (see  Baillie’s  Dig.,      2nd ed.,  p.593). When  a  wakf  is      created constituting  the family or      descendants of  the wakf  [sic, for      wakif]  the   recipients   of   the      charity so  long as they exist, the      poor  are  expressly  or  impliedly      brought in  not for  the purpose of      making the wakf charitable (for the      support   of    the   family    and      descendants is a part and parcel of      the charitable  purpose  for  which      dedication is  made), but simply to      impart permanency to the endowment.      When the  wakif’s descendants fail,      it must  come to the poor. So it is      an enduring benefaction - an act of      ibadat  or   worship,  to  use  the      language of  the Jawahir-ul-Kalam,-      an   act   by   which   kurbat   or      ’nearness’ is  gained to the Deity,      according to the bahr-ur-Raik."      Despite this  clear Islamic pronouncement regarding the validity of  wakfs-alal-aulad, the  Privy Council pronounced in the case of Abdul Fata Mohammad Ishak (supra) that such a wakf would  be invalid, even if there is an express ultimate dedication to  the poor, because the bequest to "charity" is too  remote.   The  decision   can,  at  best,  be  held  as interpreting Mohammedan  Law as interpreted in British India of the  time, as  the  case  arose  in  British  India.  Not surprisingly, it led to large scale protests.      On account  of large  scale protests  in British  India against the  decision, the  Mussalman Wakf Validating Act of 1913 was  enacted to validate such wakfs. This Act cannot be looked upon  as laying  down any new principle of Mohammedan Law. As  Fyzee has  put it,  (page 304) the Act purported to restore the  law of the Shariat in India and to overrule the law as  laid down  by the  Privy Council. This Act was given retrospective effect by the Mussalman Wakf Validation Act of 1930. Both  the Acts  applied to  British India.  After  the Constitution  came   into  force,   the  operation   of  the Validation  Act   of  1913  was,  therefore,  by  amendment, excluded from  Part-B States  i.e.  territories  which  were originally native States or outside British India. After the Constitution (Seventh Amendment) Act, 1956 abolishing Part-B States (inter alia), all the territories which were included in Part-B  States prior  to  1956  were  excluded  from  the Validation Act,  1913. It  is, therefore,  contended by  the department that  the Validation  Act did  not apply  to  the State of  Hyderabad which  was a Part-B State upto 1956. And hence the  wakfs in  the present  case are  hit by the Privy Council decision in Abdul Fata Mohammad Ishak (Supra).      However, the  Privy  Council  decision  in  Abdul  Fata Mohammad Ishak  (supra) can  be taken  to  have  interpreted Mohammedan  Law   as  applicable   in  British   India.  The

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Validation Act,  1913 merely restored the law of the Shariat which had  been disturbed  by the  Privy  Council  judgment. Hyderabad,  which   was  outside   British  India,  must  be considered as continuing to be governed by the principles of Mohammedan Law  as understood by the accepted authorities on the  subject.   Non-applicability  of   the  Mussalman  Wakf Validation Act,  1913 to  the State  of Hyderabad  will  not affect wakfs-alal-aulad  created in  the State  of Hyderabad which are  valid under the accepted principles of Mohammedan Law.      In fact,  the Hyderabad High Court in 1955, referred to and applied  the general  principles of  Mohammedan  Law  to declare a  wakf invalid.  In the case of Salah v. Husain and Ors. (AIR 1955 Hyderabad 229), one Salah Bin Ahmed purported to create a wakf-alal-aulad with himself as mutawalli.      After his  death his  sons were  to  be  mutwallis  and thereafter his  grandsons. There  was no  dedication to  the poor. Dealing  with the  position under  the Mohammedan Law, the High  Court of  Hyderabad referred  to the difference of opinion  between  the  disciples  of  Abu  Hanif  viz.  Imam Mohammad and  Abu Yusuf. While Imam Mohammed was of the view that without  dedication to  the poor, the wakf was invalid, Abu Yusuf  was said to be of the view that such a dedication was implicit  in the  wakf. The Court held that there was no clear authority  that the  view of  Abu Yusuf  differed from that of  Imam Mohammad  on this  point. On the principles of Mohammedan Law the wakf, in the absence of dedication to the poor, was invalid.      Although the  High Court  referred, inter  alia, to the Privy Council decision in Abdul Fata Mohammad Ishak (supra), and the  Mussalman Wakf  Validation Acts 1913 and 1930 which applied only  to British  India, it appears to have accepted the submission  that the  Court was  obliged  to  apply  the original principles  of Mohammedan  Law in as much as H.E.H. the Nizam  in the Charter granted to the High Court directed that in  cases where the parties were Muslims the case would be governed  by Sharai-Shariff. The High Court held the wakf to be invalid under Mohammedan Law.      Of course, in the case before it, both under the law as declared by  the Privy  Council as  also the  dictum of Imam Mohammad (said  to be no different from that of Abu Yusuf on this issue) the wakf was invalid. But the High Court, in the light of  its Charter also took the assistance of Mohammedan Law as  laid down  by Islamic  authorities in  deciding  the issue.      In the light of the principles of Mohammedan Law as set out earlier,  the two  trusts created in 1953 in the present case are valid wakfs. The wakif-settlor made a dedication in perpetuity  of  the  subject  matter  of  these  trusts  for purposes which  are considered  pious under Islamic Law. The properties, therefore,  ceased to  be the  properties of the settlor on  the creation  of the  wakfs in  1953.  When  the settlor died  in 1967,  they could  not form  a part  of his estate -  the  settlor  having  divested  himself  of  these properties fourteen years prior to his death.      The appellant has also pointed out that during the life time of the settlor, the income-tax authorities had accepted the validity  of the wakfs and had not treated the income of the wakfs as the income of the settlor.      In the present case, therefore, the beneficial interest created in favour of Oalia Kulsum and Anwar Begum is a valid creation of  trust which  is not affected by Sections 13 and 14 of  the Transfer of Property Act. As a result the settlor had divested himself of these properties during his lifetime for the  benefit of  his grand daughter Oolia Kulsum and his

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daughter-in-law  Anwar   Begum  and   thereafter  for  their descendants and  then for  the holy  shrine at  Khum. On the date of  his death  the Settlor did not have any interest in the properties  nor had  he reserved any interest to himself under these  trusts. Hence, for the purposes of Estate Duty, the deceased  cannot be considered as having any interest in the trust property which passed on his death. The properties which constituted  the subject  matter of  the  two  trusts, therefore, cannot  be included in the estate of the deceased Sir Mir  Osman Ali  Khan, the  Nizam of  Hyderabad  for  the purposes of estate duty.      In the  premises, the  judgment and  order of  the High Court are  set aside  and the  two questions are answered in the negative and in favour of the appellant. The appeals are accordingly allowed with costs.