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CASE NO.: Appeal (civil)  6994 of 1999

PETITIONER: Kokilambal & Ors.

RESPONDENT: N.Raman

DATE OF JUDGMENT: 21/04/2005

BENCH: ASHOK  BHAN & A.K. MATHUR

JUDGMENT: J U D G M E N T  

A.K. MATHUR, J.

               This appeal is directed against an order passed by  learned Single Judge of the High Court of Madras  in Second Appeal  No.1866 of 1986 on November 19,1998 whereby learned Single  Judge affirmed the judgment and order of the First  Appellate Court  and dismissed the second appeal filed by the appellant herein.

               Brief facts giving rise to this appeal are as follows. The  plaintiff- respondent  instituted Original Suit No.8182 of 1980 before  the XVIth Assistant Judge, City Civil Court, Chennai praying for seven  reliefs. The main reliefs prayed for in the suit  read as under :

       " (i)   Declaring that the plaintiff is entitled to  the properties in plaint A & B Schedule  absolutely after the life time of the lst  defendant; (ii)    For a declaration that the deeds of revocation  dated 27.3.1979 registered as document  Nos.431 and 432 of 1979 in the office of the  Sub-Registrar, Madras in respect of properties  described in Schedule A and B hereunder are  void in law and not valid and binding on the  plaintiff; (iii)   For a declaration that the deeds of settlement  dated 30.3.1979 executed by the lst defendant  in favour of defendants 2 and 3 in respect of  plaint A and B schedule properties are void in  law and are not valid and binding on the plaintiff; (iv)    For a declaration that the deed of mortgage  dated 29.9.1979 executed by defendants 1 to 3  in favour of 4th defendant in respect of the plaint  A and B Schedule properties are not valid and  binding on the plaintiff; (v)     Directing the defendant to render true and  correct account of the rental income from the  properties described in the Schedule A and B  and to pay over the half share payable to the  plaintiff;"

According to the plaintiff in the suit,   schedule properties A & B   belonged to one Late Manicka Mudaliyar, the husband of the first  defendant. That the said Manicka Mudaliyar died in or about 1963  leaving behind Kokilambal,  the first defendant as his sole legal heir.  Since the deceased Manicka Mudaliyar  had no issue, he showered  his love and affection  to his elder sister’s son Varadan and had a  mind to adopt him  but before he could do so, he expired. Keeping in

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view the wishes of her deceased husband, Kokilambal got all the last  rites  performed  through Varadan. Kokilambal, the wife of deceased  Manicka Mudaliyar made settlement on June 12, 1963 of A schedule  property in favour of Varadan while reserving her right  and interest  therein. Similarly, she also made a settlement on June  27, 1964 in  respect of B schedule property and executed a deed of settlement in  favour of Varadan. By virtue of these two settlement deeds, settler  Kokilambal stipulated  certain terms and conditions (reference shall  be made hereinafter). Varadan who was a bachelor executed a will  on May 22, 1978 in respect of his other properties  other than those  properties which were received by him from Kokilambal by way of  settlement in favour of his brother( Plaintiff) . But Varadan died as a  bachelor on February 1, 1979. On March 27, 1979 the settlor,  Kokilambal revoked  both the settlement deeds  in favour of Varadan  and she executed a fresh settlement deed in favour of one Babu @  Pilani and Shantha @ Shanthi, the wife of Babu.  Shanti was the  daughter of Kokilambal’s brother.  Thereafter, Varadan’s brother,  N.Raman filed a suit  to declare that he is entitled to the suit  properties after the death of Varadan and sought a declaration that  the revocation of settlement  deed made by Kokilambal on March 27,  1979 be declared as null and void and likewise the fresh deed of  settlement executed by Kokilambal on March 30,1979 in favour of  Defendant Nos.2 & 3  i.e. Babu and Shanthi be declared void in law.  The suit was dismissed by the trial court. The plaintiff preferred an  appeal before the first appellate court which decreed the same.  Against that an appeal was preferred by the appellant and the same  was also dismissed by the impugned judgment of the High Court in  second appeal on November 19,1998. Aggrieved against this order  dated November 19,1998, special leave petition was filed and on  grant of special leave this appeal has come up for disposal before us.

       The basic question which calls for consideration is what is the  effect of the earlier two settlements made by settlor Kokilambal in  favour of deceased Varadan; and whether by virtue of that settlement  deceased Varadan became the absolute owner and after his death  whether  Kokilambal reserved her right to revoke the settlement or  not ? In order to appreciate the contents of the settlement of the suit  schedule properties i.e. A & B it would be necessary to reproduce   the recitals in the settlement deeds (A-1 & A-2)  which read as under :

       " Since we did not beget issues, even during  my husband’s life time he brought up Varadan,  the younger son of his elder sister viz.,  Kuppammal, as his own son. He ( my husband)  suddenly  passed away. Even during his life time  he has decided to take Varadan as an adopted  son. I have also decided to act according to his  wishes and hence, I performed the last rites of  my deceased husband through Varadan. Due to  the love and affection that I have towards  Varadan, I intend to make an arrangement for  him, and hence I executed and delivered this  Deed of Settlement.

       This income derived from out of the under- mentioned Schedule property viz., Door No.43,  Kakkaran Basin Road, shall be enjoyed by  myself and Varadan, till my life time. After my  demise, the house, more fully described in the  schedule, shall be enjoyed by Varadan  absolutely.

       From now on, the aforesaid Varadan himself,  shall collect the rental income of the aforesaid

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house and pay the corporation and land tax,  repairs etc., and the reminder rental amount  shall be enjoyed by me and Varadan in moiety.  Hereafter, I have no right to alienate the  property. But, both of us have right to alienate  the same jointly."

       Learned Single Judge of the High Court of Madras came to the  finding after review of various decisions of this Court as well as the  said High Court, that by instruments of settlement i.e. A-1 & A-2, a  vested right was created in favour of deceased, Varadan and since  vesting has taken place in favour of Varadan, the settlor cannot  subsequently revoke that settlement and execute a fresh settlement  in respect of the suit schedule property in favour of Babu & Shantha.  Learned Single Judge affirmed the finding of the trial court that the  order of revocation of the settlement was  bad and likewise the  execution of a fresh settlement in favour of the appellant Nos.2 & 3   was also consequently bad.

       Learned counsel for the appellant has submitted that both the  courts below have not correctly approached the matter because the  settlement deed does not create a vested right in favour of Varadan   so long as Kokilambal was alive and as per the terms of the  settlement the vesting of the suit schedule property i.e. A & B   would  only arise after the death of Kokilambal. Therefore, there is total mis- reading on the part of both the courts of the contents of the  settlement deeds. As against this, learned counsel for the respondent  submitted that by virtue of the aforesaid settlement, a vested right  was created in favour of the deceased settlor, Varadan and therefore,  by way of succession the suit property should come to his brother  plaintiff and the settlor Kokilambal cannot revoke the settlement  deeds and issue a fresh settlement in favour of appellant Nos.2 & 3.

       Settlement is one of the recognized modes of transfer of  moveable and immovable properties under Hindu law. The Courts  have accepted such mode as legal and valid mode of transfer of  properties. Courts have emphasized  that in order to find out the  correct intent of the settlor the settlement deed  has to be read as a  whole and draw their inference of its content. Therefore, it has   always been emphasized that the terms of the settlement should be  closely examined and the intention of the settlor should be given  effect to.  Sometimes there is absolute vesting and sometimes there  is contingent vesting as contemplated in Sections 19 and 21 of the  Transfer of Property Act, 1882.  In order to ascertain the true intention  of the settlor one has to closely scrutinize  the settlement deed,  whether  the intention of the settlor was to divest the property in his  life time or to  divest the property contingently on the happening of  certain event. In this connection, reference may be made to a  decision of this Court in the case of Rajesh Kanta Roy vs. Santi Debi  reported in [1957] SCR 77.  Their Lordships observed that the  determination of the question as to whether an interest created is  vested or contingent has to be guided generally by the principles  recognized under Sections 19 and 21 of the Transfer of Property Act,  1882 and Sections 119 and 120 of the Indian Succession Act, 1925.  Their Lordships quoted a passage  from Jarman on Wills ( 8th Ed. ,  Vol II at page 1390 which states as follows :                  " So, where a testator clearly expressed his  intention that the benefits given by his will  should not vest till his debts were paid, *** the  intention was carried into execution, and the  vesting as well as payment was held to be  postponed."

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Their Lordships in the case of Rajesh Kanta Roy (Supra)  have  observed as follows:

               " Apart from any seemingly technical  rules which may be gathered from English  decisions and text-books on this subject, there  can be no doubt that the question  is really one  of intention to be gathered from a  comprehensive view of all the terms of a  document."

Their Lordships have clearly observed that in order to decide the  issue one has to closely go through the terms of settlement and the  intention of the settlor.                   In this connection, our attention was invited to a decision  of this  Court in the case of Usha Subarao vs. B.N.Vishveswaraiah & Ors.   reported in (1996) 5 SCC 201 wherein it was observed  as follows:

               " An interest is said to be a vested  interest when there is immediate right of present  enjoyment or a present right for future  enjoyment. An interest is said to be contingent if  the right of enjoyment is made dependent upon  some event or condition which may or may not  happen. On the happening of the event or  condition a contingent interest becomes a  vested interest."

Their Lordships also relied upon an observation made in Halsbury’s  Laws of England, 4th Edn., Vol. 50, paras 591, 592  which read as  under :

       " Although the question whether the interest  created is a vested or a contingent interest is  dependent upon the intention to be gathered  from a comprehensive view of all the terms of  the document creating the interest, the court  while construing the document has to approach  the task of construction in such cases with a  bias in favour of vested interest unless the  intention to the contrary is definite and clear. As  regards Wills the rule is that " where  there is a  doubt as to the time of vesting, the presumption  is in favour of the early vesting of the gift and,  accordingly, it vests at the testator’s death or at  the earliest moment after that date which is  possible in the context."

Their Lordships also relied upon Halsbury’s Laws of England, 4th  Edn., Vol.50, Para 589 at page 395 which reads as under :

       " It is necessary to construe the Will to find out  the intention of the testator. With regard to  construction of Wills the law is well settled that  intention has to be ascertained from the words  used keeping in view the surrounding  circumstances, the position of the testator, his  family relationship and that the Will must be read  as a whole"

Our attention was also invited to a decision of this Court in the case  of Namburi Basava Subrahmanyam vs. Alapati Hymavathi & Ors.

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reported in (1996) 9 SCC 388. In this case also the question was  whether the document is a will or settlement. Their Lordships held  that the nomenclature of the document is not conclusive one. It was  observed as follows:

       " The nomenclature of the document is not  conclusive. The recitals in the document as a  whole and the intention of the executant and  acknowledgment thereof by the parties are  conclusive. The Court has to find whether the  document confers any interest in the property in  praesenti so as to take effect intra vivos  and  whether an irrevocable interest thereby, is  created in favour of the recipient under the  document, or whether the executant intended to  transfer the interest in the property only on the  demise of the settlor. Those could be gathered  from the recitals in the document as  a whole.

       The document in this case described as  ’settlement deed’ was to take effect on the date  on which it was executed. The settlor created  rights thereunder intended to take effect from  that date, the extent of the lands mentioned in  the Schedule with the boundaries mentioned  there under. A combined reading of the recitals  in the document and also the Schedule would  clearly indicate that on the date when the  document was executed she had created right,  title and interest in the property in favour of her  second  daughter but only on her demise she  was to acquire absolute right to enjoyment,  alienation etc.  In other words, she had created  in herself a life interest in the property in  praesenti and vested the remainder in favour of  her second daughter. It is settled law that the  executant while divesting  herself of the title to  the property could create a life estate for her  enjoyment and the property would devolve on  the settlee with absolute rights on the settlor’s  demise. Thus the document in question could be  construed rightly as  a settlement deed but not a  s a Will. The settlor, having divested herself of  the right and title there under, had, thereafter, no  right to bequeath the same property in favour of  her first daughter. "

In this background, we have to examine the settlement deeds created  by Kokilambal in favour of  the deceased Varadan.  The recitals of the  settlement deeds  i.e. A-1 and A-2  as reproduced   above, clearly   says that since Kokilambal had no son and her husband Konicka  Mudaliyar during his life time has bestowed  his love and affection on  Varadan, the son of his elder sister, and therefore, out of love and  affection, she has settled that the income derived from the properties  i.e. Door No.43, Kakkaran Basin Road, shall be enjoyed by herself  and Varadan, till her life time and after her demise, it shall be enjoyed  by Varadan absolutely. She further authorised  him to collect the  rental income of the aforesaid house and pay the corporation  and  land tax, repairs  etc. and the remainder rental amount shall be  enjoyed by herself and Varadan in moiety. The appellant No.1 further  settled that she would not alienate the property but both of them  reserve the right to alienate the property jointly.  Therefore, this  settlement in no uncertain terms lays down that the properties in  question will vest absolutely after the death of the appellant No.1 and  during their life time, both will enjoy the usufructs  but Varadan would

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collect the rental income of the aforesaid property. It is further  mentioned that both will have the right to alienate the property in  question jointly.  These conditions are very clear , Varadan would  have acquired the absolute right over the property after the death of  Kokilambal. Even during their life time if the property was to be  alienated then the same would be alienated by them jointly meaning  thereby that the appellant No.1 continued to hold the property during  her life time and both of them were permitted to enjoy the usufructs of  that property.  These settlement deeds in our opinion, clearly make  out that Varadan was not made absolute owner of the property during  the life time of the settlor, Kokilambal.

       Learned counsel for the respondent has tried to interpret this  document that since the appellant No.1 had already divested her right  to alienate the property that should be enough to show that the entire  property stood vested in favour of Varadan. Learned counsel for the  respondent tried to seek support from a decision in the case of  Turlapaty Rajeswara Rao & Anr. vs. Kamarajugadda Rangamma &  Ors. reported in  [1949] 1 MLJ 480 ( Vol.96)  In that case also it was  observed that the wife got the life estate in the properties and  the  nephews got the vested interest in the same although they are  postponed till her death. In this case also it was held that the  fundamental rule of construction of a will is that the intention of the  testator should be gathered from a reading of the will as a whole.  Learned counsel for the respondent also invited our attention to a  decision in the case of  P.Ram Mohan vs. Lalitha Raghuraman & Ors.  reported in AIR 1976 Madras 333. In that case, on the facts Their  Lordships came to the conclusion that where a settlor by a deed of  settlement created a life interest in favour of himself, his wife, his  foster son, it was held that the two sons of the settlor acquired a  vested interest in the property on the date of execution of the deed.  Therefore, this depended   on the construction of the settlement  deed. But in the present case,  we have quoted above the recitals in  the settlement deeds i.e. A-1 and A-2 and  have also interpreted the  same that the settlor Kokilambal had not completely divested her right  in favour of the deceased Varadan but it was a contingent one that it  would vest after her death. Therefore, the intention of the settlor was  very clear that the settlement was to come into effect after the death  of settlor, Kokilambal.

       There is an additional factor for coming to this conclusion.   Vardan who was a bachelor and had  certain property inherited from  his real parents, he executed a will  in favour of his brother, the  plaintiff.  But he did not include this property, that shows that at the  relevant time it was also clear that the property  which would come to  him by way of settlement had not  come to be vested in him and  therefore, that property was not included in his will when he made the  same with regard to the property which was received by him from his  father or from his ancestors. Therefore, from this we have no  hesitation in our mind to hold that  the view taken by the leaned  Single Judge of the High Court of Madras as well as by  the first  appellate Court was not correct and it was totally misreading of the  deed of settlement.  

       Since Kokilambal survived after Vardan, she revoked the  settlement deeds and issued a fresh settlement in favour of Appellant  Nos.2 & 3. On account of the death of Varadan Kokilambal who was  the settlor remained the sole owner of the suit property because   settlement deed had come to an end on account  of the death of  settlee, Varadan. Therefore, she had  the right to execute fresh deed  of settlement in favour of appellant Nos.2 & 3. Thus, we do not find  that subsequent settlement made by the appellant No.1  in favour of  Appellant Nos.2 & 3 suffers from any illegality.

       Hence, as a result of our above discussion, we allow this

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appeal and set aside the impugned order dated November 19, 1998  passed by  learned Single Judge of the High Court of Madras in  Second Appeal No.1866 of 1986 as well as the order of the first  appellate court whereby the order of the trial court dismissing the suit  was reversed. There would be no order as to costs.