The true character of a document described, stamped and registered as a settlement deed is what this court is mainly called upon to decide. Is it a gift or a will ?
2. The suit was for declaration of title to and recovery of possession of plaint schedule item No.1 and for partition of plaint schedule items 2 to 5. The trial court granted the prayer for partition of items 2 to 5, the correctness of which is not challenged in this appeal; only the decree granting declaration of title to and recovery of possession of item No.1 is questioned by the 4th defendant, who claims title to it and who is in its possession.
3. Plaint schedule item No.1, which has an extent of 60 cents, along with some other properties belonged to one Narayanan and his wife, Bhargavi Amma. Defendants 1 and 2 are their son and daughter. They had another son, Vishvambaran, who predeceased them. The 1st plaintiff is his widow. Plaintiffs 2 and 3 and the 3rd defendant are their children. In 1985 Narayanan and Bhargavi Amma (hereinafter called settlors) executed and registered Ext.A1 deed which is described as a settlement deed. The properties described in A and B schedules in the document were allotted to the 1st and 2nd defendants. The property described in 'C' schedule was allotted to plaintiffs 2 and 3 and the 3rd defendant (hereinafter called minor donees) who were minors at that time. This property is the plaint schedule item No.1.
4. It is alleged that the plaintiffs “learnt that defendants 1 and 2 have created some documents with respect to plaint schedule properties” and they “have inducted the 4th defendant into plaint schedule item No.1”, which is the cause of action pleaded in the plaint.
5. In the written statement of the 4th defendant certain facts are disclosed. In 1986 the settlors executed Ext.B10 deed by which they purported to cancel Ext.A1 settlement deed. In 1988 Bhargavi Amma, one of the settlors and to whom plaint schedule item No.1 belonged, sold 30 cents out of the 60 cents to the husband of the 2nd defendant by sale deed No.3165 of 1988, who along with the 2nd defendant sold it to the 4th defendant by Ext.B9 sale deed of 1990. After the death of Bhargavi Amma on 31.12.1989 the other settlor, Narayanan, and the 1st defendant sold the remaining extent of 30 cents to the 4th defendant by Ext.B8 sale deed of 1991. The 4th defendant thus claims title to the plaint schedule item No.1.
6. In the replication the plaintiffs assert that since the settlement had come into effect, the cancellation deed executed by the donors, and the sale deeds executed in favour of the husband of the 2nd defendant and in favour of the 4th defendant are void.
7. When Ext.A1 settlement deed was executed, the minor donees along with their mother were residing at a distant place. Neither the minor donees, nor their mother, the 1st plaintiff, got custody of the deed. Mutation was not effected in favour of the minor donees, nor did they get actual possession of the property, nor were they entitled to take income. (The evidence of the 1st plaintiff who was examined as PW1 that she took income from the property after the execution of Ext.A1 settlement deed is false).
8. Relying on the decisions of the Supreme Court in K.Balakrishnan vs. K.Kamalam (AIR 2004 SC 1257) and Asokan Vs. Lakshmikutty (2007 (13) SCC 210) the learned Sub Judge held that since the donees were minors at the relevant time, there is a presumption of acceptance of gift by them. He also took notice of the fact that in the witness box the 1st defendant (DW1) claimed to have taken possession of the property allotted to him and got mutation effected in his favour, and of the testimony of DW2 that the 2nd defendant also had taken possession of the property allotted to her by Ext.A1 settlement deed.
9. Though in the course of the proceedings in the trial court defendants 5 to 7 were impleaded, no consequential amendment was made in the plaint. It has come to the notice of this Court that this happens in many cases. Though additional defendants were impleaded, the plaint does not disclose the reason for their impleadment. More often than not trial courts fail to take notice of the direction in Order 1 Rule 10 Sub rule 4 C.P.C; which is extracted below:
(4) Where defendant added, plaint to be amended - Where a defendant is added, the plaint shall, unless the Court otherwise directs, be amended in such manner as may be necessary, and amended copies of the summons and of the plaint shall be served on the new defendant and, if the Court thinks fit, on the original defendant.
As it stands now, the plaint does not contain even a whisper about the additional defendants. Along with the application for impleadment of additional defendants the plaintiff shall file an amendment application to incorporate necessary averments in the plaint, failing which the court shall direct him to do so before the impleading application is considered.
10. One of the grounds urged in the appeal memorandum is that Ext.A1 deed is a will and not a gift deed. There was no such contention or argument in the trial court. The trial court as well as the parties took it for granted that it is a settlement deed. As the question whether it is a settlement deed or a will is a matter for interpretation and argument, even if it was not raised in the trial court the appellate court cannot refuse to entertain it.
11. Interpretation of a document styled as settlement deed came up for consideration before the Apex Court in Kokilambal and Others vs. N.Raman (2005 (11) SCC 234), in which the court has observed:
“Settlement is one of the recognised modes of transfer of movable and immovable properties under Hindu law. The courts have accepted such mode as legal and valid mode of transfer of properties. Courts have emphasised 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 from its content. Therefore, it has always been emphasised that the terms of the settlement should be closely examined and the intention of the settlor should be given effect to”.
12. Close scrutiny of the terms of settlement and the intention of the settlor is necessary. The question is really one of intention to be gathered from a comprehensive view of all the terms of the document, the Supreme Court has said in Rajes Kanta Roy Vs. Santi Debi (AIR 1957 SC 255). In Namburi Basava Subramanyan Vs. Alapati Hymavathi (1999 (9) SCC 388) the Apex Court has observed that the nomenclature of the document is not conclusive and the court has to find whether the document confers any interest in the property in prasaenti so as to take effect intra vivos and whether an irrevocable interest thereby is created in favour of the recipient and all those could be gathered from the recitals of the document as a whole.
13. A free English translation of the relevant recitals in Ext A1 deed which is in Malayalam is given below:
“Subject to the directions given in this deed, the donees shall enjoy the properties allotted to them effecting mutation of names and paying land tax to the Government. We will take income from the properties during our life time and thereafter, you may enjoy the property absolutely entering upon the property and taking income from it. If the minor do not attain majority during our life time, their mother shall possess and take income from the property on their behalf and shall maintain them and meet their educational expenses etc. If any of the donees wants to sell his/her property after our death, the others shall have the right of preemption......... We have the right to encumber the properties to secure a loan which along with its interest could be paid off within three years with the income from the properties subject to a maximum of Rs.3000/-. If the liability is not discharged during our life time, the donees shall discharge it”
14. The learned counsel for the appellant has drawn my attention to the following facts in support of his argument that Ext.A1 is a will and not a gift.
(1) Right of alienation is not given to the donees before the death of the settlors.
(2) The donees are entitled to 'enter' the property only after the death of the settlors.
(3) The settlors have reserved the right to encumber the properties.
Presently, I shall consider these facts one by one.
15. Though there is a direction to get mutation effected in favour of the donees, Ext.A1 does not mention that they have a right to alienate the property immediately. On the other hand, the right of alienation after the death of the settlors is specifically mentioned.
16. Namburi Basava Subramaniyan vs. Alapati Hymavathi (1996 (9) SC 388) was a case in which the donee was entitled to absolute right of enjoyment and alienation only after the death of the settlor. Still the Supreme Court held that the document was a settlement deed and not a will because there were other facts revealing the settlor's intention of it to be a settlement deed. So right of immediate alienation or right of absolute enjoyment is not necessary in the case of a settlement deed.
17. The learned counsel for the appellant submits that since the donees were given the right to 'enter' the property only after the death of the settlors, the only conclusion that may be drawn is that the document is a will and not a gift deed.
18. In K.Balakrishnan Vs. K.Kamalam (2004(1) SCC 581) the Supreme Court has held: “It is open to the donor to transfer by gift title and ownership in the property and at the same time reserve its possession and enjoyment to herself during her life time. There is no prohibition in law that ownership in a property cannot be gifted without its possession and right of enjoyment”. This is an authority to hold that even a document which does not permit the donee to take possession of the properties immediately on its execution can be a settlement deed.
19. It is a rule of interpretation that a word gets its colour from the context in which it is used and from the other words accompanying it. In Ext.A1 the word 'enter' is seen used along with the words 'to take income from the property'. The right to take income from the property was reserved for the settlors during their life time. In my view the word 'enter' and the words 'to take income' convey the same idea of enjoyment of the property. The settlors only meant that to take income from the property the donees may enter it only after the death of the former. The word 'enter' is not used as a synonym for 'possess'.
20. The subsequent events and the conduct of the parties other than the minor donees also will help understand the intention of the settlors. The 1st defendant (DW1) claims to have taken possession of the property allotted to him. DW2, husband of the 4th defendant who was examined on her behalf, admits that the 2nd defendant took possession of the property allotted to her by Ext.A1 settlement deed. There was no restriction on the parties' taking possession of the properties, which is why the 1st and 2nd defendants took possession of their properties immediately after the execution of Ext.A1 settlement deed. There was a separation of the properties allotted to the 1st and 2nd defendants immediately after the execution of the document. In other words, the property set apart for the minor donees also was separated from the rest of the properties. This would not have happened during the life time of the settlors if by Ext.A1 they did not intend to permit the donees to take possession of the properties. There is no merit in the argument that the right to take possession was given only after the death of the settlors.
21. In Rajes Kanta Roy Vs. Santi Debi (supra) it is observed that a document shall be interpreted with a bias in favour of vesting unless the intention to the contrary is definite and clear. This has been followed by the Apex Court in Usha Subbarao Vs.B.N.Vishveswaraiah and others (1996 (5) SCC 201), Kokilambal and Others Vs.N.Raman (supra) and P.K.Mohan Ram Vs.B.N.Ananthachary and Others (supra).
22. There is no dispute that the nomenclature of the document and its registration are not conclusive in taking a view one way or the other as observed in Namburi Basava Subramanyan (supra) and P.K.Mohan Ram's case (supra). But at the same time the view taken by the Madras High Court in Ramaswamy Naidu Vs. M.S.Velappan and others (1979 (2) MLJ 88) has been approved by the Supreme Court in P.K.Mohan Ram's case (supra). That Ext A1 is written up on stamp papers, it carries the label settlement deed and it is registered are relevant.
23. The test of revocability is considered an important and easy test when the dispute is whether a document is a will or a gift deed (settlement deed). One of the early decisions on this point is Gangarao Vs. Pandyala Somanna (AIR 1927 Madras 197). The view taken in it has been reiterated in Venkata Subramanya Iyer Vs. Srinivasa Iyer (AIR 1929 Madras 670) and approved by the Supreme Court in P.K.Mohan Ram's case (supra). As observed in P.K.Mohan Ram's case (supra) there is no language in Ext.A1 indicating that the settlors retained with them the power to revoke the document. Ext.A1 stipulates that if any of the donees wants to sell his property after the death of the donors the other donees will have the right of preemption. By necessary implication it means that the settlors did not intend to retain right of alienation during their life time. This surrender of right of alienation is a sure indication that the donors did not reserve any right to revoke the disposition.
24. Immediate divesting of settlor's ownership in the property and vesting of it in the donee is the essential requirement of a settlement deed. The Madras High Court in Ramaswamy Naidu Vs.Gopalakrishna Naidu (AIR 1978 Madras 54) has put it in the following words. “But if the executant divests his interest in the property and vests his interest prasaenti in the settlee, the document will be a settlement”. So the crucial question is whether Ext.A1 discloses divesting the settlors of their title in the property and vesting of it in the donees in prasaenti.
25. Learned counsel for the appellant has invited my attention to the recital in Ext A1 that the settlors reserved the right to encumber the property for an amount of Rs.3,000/-, which according to him reveals their intention to retain the title. It is also his submission that the direction to get mutation effected in favour of the donees and to pay tax is not an indication that the settlors had the intention to divest themselves of the title to the property. To buttress his argument he places reliance on Omana Vs. Kesavan (2005(1) KLT 893).
26. It is also the submission of the learned counsel for the appellant that the recitals in Ext A1 and the document involved in Omana's case are identical. But it is well settled that interpretation of a document by one court cannot be adopted in construing the terms of another document even by the same court because not only the recitals in the document, but many other facts have to be taken into account in ascertaining the intention of its maker.
27. The question which required an answer in Omana's case was whether the document marked Ext.A1 in that case was a will or a gift deed. The deed provided for mutation of names in favour of the donees and payment of tax by them. Possession was retained by the donor and the right to take income was reserved for him. There was a stipulation that the donor would be entitled to mortgage the property for an amount of Rs.75/-. Still it was held that the document was a will and not a gift deed. The learned Judge heavily relied on Naramada Ben Manganlal Thakker Vs. Pranjeevan Das Manganlal Thakker (1997(2) SCC 255) to reach the above conclusion.
28. In Naramada Ben's case there was no dispute that the document was a gift deed. The donor reserved life interest in the property. He did not hand over its possession; nor did the donee accept the gift. The contention was that the gift was conditional and incomplete. The Supreme Court held: “It would thus be clear that the execution of a registered gift deed, acceptance of the gift and delivery of the property together make the gift complete. Thereafter, the donor is divested of his title and the donee becomes the absolute owner of the property”. The court held that the document revealed a conditional gift and there was no acceptance of it also.
29. The following observations in Omana's case would show how the learned Judge reached his conclusion: “In this case, the very sentence of disposition contains all the clauses and the disposition is complete only by the last clause which restricts the right of disposal of the property”. “This analysis will show that absolute right is given to the executees only after her life time and till then they are not given full right to deal with the property by transfer or otherwise. It is true that Kalyani has intented the plaintiff to enjoy the property after mutation in revenue records and change of patta. Admittedly, neither the mutation in revenue records nor payment of revenue was made after the execution of the deed by the plaintiffs”.......... The full ownership is given only after the life time of Kalyani ............Therefore, I am of opinion that the document lacks the essential ingredients of a gift by immediate transfer of absolute right to the donee”. The learned Single Judge also took notice of the subsequent conduct of the parties which is evident from the following statement: “Admittedly no mutation was effected, no changed patta was obtained, no payment of revenue was made by the plaintiffs”. The court held: “ The absence of a valid divesting of the absolute right of the donor in favour of the donee before the death of the donor it cannot be said that there was a valid gift created by Kalyani”.
30. In the instant case the material and relevant recitals are these: “................... the donees shall enjoy the properties allotted to them effecting mutation of names and paying land tax to the Government.................................... we will take income from the properties during our life time and thereafter you may enjoyment the properties absolutely by entering upon it and taking income also”. This should not be misunderstood to mean that absolute title was given only after the death of the settlors. What was not absolutely given in prasaenti was the enjoyment of the property, which is evident from the clause “may enjoy the properties absolutely.................. taking income also”. The word 'also' is very significant. The enjoyment was not complete as the donees were not given the right to take income till the death of the donors. The necessary implication is that the donees were given every right in prasaenti except the absolute enjoyment of the properties by taking income. I am inclined to take the view that the above recital in Ext.A1 is a strong indication that there was divesting of interest of the settlors and vesting of interest in prasaenti in the donees.
31. Now the effect of the right reserved for the settlors to create encumbrance may be examined. The relevant clause is this: “ We have the right to encumber the properties to secure a loan which along with its interest could be paid off within three years out of the income from the properties subject to a maximum of Rs.3,000/-”. The learned counsel for the respondents would submit that this is only a mode of enjoyment, which was necessary for effective enjoyment and it did not affect the ownership which had already been vested in the donees. The amount that could have been borrowed was only Rs.3,000/-. The recitals show that the settlors were of the view that three years' income was sufficient to discharge the debt and its interest. What can be gathered from this is that it was only to facilitate enjoyment of the properties the provision for creating encumbrance was made.
32. In Omana's case the market value of the property was Rs.100/-. The donor retained the right to mortgage the property up to an amount of Rs.75/-. The court observed: “ If by the gift deed she had divested of all her rights, how she could reserve the right to encumber the property to the extent of 3/4th of its value. It is inconsistent with an absolute gift in prasaenti ”. In this case the total market value of the properties is shown as Rs.10,000/-. The maximum amount the settlors could raise by mortgaging the properties was Rs.3,000/- only. It is less than 1/3rd of the market value shown in the document. It may also be noted that the market value shown in the document is only for the purpose of payment of stamp duty. No significance can be attached to the amount of loan the settlors could have taken.
33. Transfer by settlement deed does not find a place in the Transfer of Property Act. But the term 'settlement' is defined in the Kerala Stamp Act. Section 2(q) of the Act gives the definition:
(q) “settlement” means any non-testamentary disposition in writing, of movable or immovable property made-
(i) in consideration of marriage,
(ii) for the purpose of distributing property of the settler among his family or those for whom he desires to provide, or for the purpose of providing for some person dependent on him, or
(iii) for any religious or charitable purpose;
and includes an agreement in writing to make such a disposition, (and where any such disposition has not been made in writing, any instrument recording whether by way of declaration, of trust or otherwise, the terms of any such disposition);
('Settlement' is defined in Section 2(b) of the Specific Relief Act also) For all purposes settlement is a gift. A Division Bench of this Court in Deputy Collector Vs. Shahul Hameed (1991(1) KLT 873) examined the meaning of 'settlement'. The Bench has observed: “ It will be a 'settlement' if the transfer is for the purpose of distributing property of the settlor among his family, or those for whom he desires to provide, or for the purpose of providing for some persons dependent on him....................... Undoubtedly, the document will operate as a gift ........................ In other words many settlement deeds may be gift deed; but all gifts need not necessarily be settlements”.
34. The purposes for which the document was executed also is relevant in view of the definition given in the Stamp Act. In Ext.A1 the settlors wanted to make provision for the donees and for the maintenance and for meeting the educational expenses of the minor donees. This is consistent with the definition of 'settlement' in the Stamp Act. Ordinarily, such clauses are seen only in settlement deeds and not in wills. This also supports to some extent the contention that what the settlors really intended was 'settlement' and not will.
35. The very fact that settlors and the donees understood Ext.A1 as a settlement deed only and not as a will also cannot be ignored. In fact, there is a specific statement to this effect in the pleadings of the 4th defendant: “Though the said document is described as a settlement deed it is really a gift deed”. As the material and relevant recitals are common to all the donees, defendants 1 and 2 cannot be heard to say that so for as they are concerned the document is a settlement deed and so far the minor donees are concerned it is a will.
36. The implications from the recitals in Ext.A1 deed, the subsequent conduct of the settlors and the donees other than the minor donees, the understanding of those persons and the 4th defendant of the nature of the deed, and its nomenclature and registration compel me to hold that the settlors intended to divest themselves of the ownership to the properties in prasaenti. Ext.A1 is a settlement deed.
37. Having entered the finding that Ext.A1 is a settlement deed, I shall examine the correctness of the finding of the learned Sub Judge that the gift was accepted by the minor donees, which was the dispute raised by the 4th defendant in her pleadings.
38. Under Section 22 of the Transfer of Property Act a gift to a person under disability like a minor may be accepted by someone else on his behalf. If the donor is a parent or grandparent, there is a presumption that the minor accepted the gift. In K.Balakrishnan Vs. K.Kamalam (supra) the Supreme Court quoted with approval the following statement in Halsbury's Laws of England: “A gift inter vivos to a child cannot be revoked. There is a presumption in favour of the validity of a gift of a parent or a grandparent to a child, if it is complete”.
39. The settlors were the grandparents of the minor donees. The father of the minor donees was dead; the latter were living away from the grandparents along with their mother, the 1st plaintiff. The presumption is that the settlors being the grandparents accepted the gift on behalf of the minor donees and continued to be in possession of the property on their behalf. This is also evident from the following recitals in Ext.A1: “If the minor donees do not attain majority before our death, their mother shall be in possession and enjoyment of the property on their behalf and shall maintain them and meet their educational expenses”. This implies that till their death the grandparents undertook to be in possession of the property on behalf of the minors. Moreover, it has come out in evidence that there was a division of the properties immediately after the execution of the settlement deed and the other donees took possession of the properties gifted to them. The settlors were in possession of the property allotted to the minor donees alone. These two facts also lend assurance to the conclusion that the settlors were in possession of the property only on behalf of the minor donees. The learned Sub Judge rightly relied on the decision in K.Balakrishnan and Lakshmikutty's cases (supra) to hold that there was acceptance of the gift.
40. The last question which requires an answer is whether the plaintiffs can be granted the prayer for declaration of their title in the absence of a prayer for a declaration that subsequent cancellation deed executed by the settlors and the subsequent sale deed executed by Bhargavi Amma in favour of the husband of the 2nd defendant and the subsequent sale deeds executed by the other settlor Narayanan along with the 1st defendant are void. In the replication there is a specific averment that those documents are void. The 4th defendant understood that the validity of her title deeds is being questioned in the suit, which is clear from her averment in the written statement that the sale deeds “in favour of this defendant are valid and the same cannot be declared void or illegal for any of the reasons stated in the plaint”. Thus, there is foundation for the claim of the minor donees that the sale deeds in favour of the 4th defendant are void. The absence of a prayer for declaration to that effect has not caused any prejudice or embarrassment to the 4th defendant. That apart, in Madhegowda Vs. Ankegowda (AIR 2002 SC 215) the Supreme Court has held that an invalid transaction is not required to be set aside by filing a suit or judicial proceedings. “ The minor on attaining majority can repudiate the transfer in any manner as and when occasion for it arises. After attaining majority if he/she transfers his/her interest in the property in a lawful manner asserting his/her title to the same that is sufficient to show that the minor has repudiated the transfer made by the de facto guardian/manager”. That was a case in which a person other than the natural guardian of a minor alienated the property of the minor. The Supreme Court held that the alienation was void. If a document is void, it is not at all necessary for the aggrieved person to get a declaration that it is void. But if it is only voidable it has to be set aside. The cancellation deed and all the subsequent sale deeds are invalid. I am of the view that the minor donees can ignore the sale deeds in favour of the 4th defendant and they are entitled to the declaration of title and recovery of possession prayed for.
41. It is contended in the written statement of the 4th defendant that if it is found that she is liable to be evicted she may be given the value of the improvements effected by her in the property. She is entitled to value of improvements only if she is a bona fide transferee. She was fully aware of the settlement deed (gift deed) executed in favour of the minor donees. Still she took the risk of purchasing the property. She is not a bona fide transferee entitled to value of the improvements allegedly effected by her. The trial court rightly refused her prayer.
In the result, this appeal is dismissed, but in the nature of the case without costs.
K.ABRAHAM MATHEW JUDGE
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