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Keshavlal Punjalal Sheth v. Collector Of Ahmedabad

Bombay High Court

Sep 19, 1923

Judgment

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Factual and Procedural Background

This appeal arises from an application for limited letters of administration relating to certain company shares that stood, in name, in the deceased's (Sheth Punjalal Amritlal) name. Punjalal died on 15 May 1916 leaving two sons, Keshavlal and Kodarlal, who had previously formed part of a joint family and who had partitioned the family estate in 1920, dividing beneficial interests in the shares. The sons applied for limited letters of administration so they could be recognized as legal representatives in respect of the shares. There was no dispute about the right to the letters; the contest was whether Court-fees were payable on the value of the shares.

The petitioners relied on the decision in The Collector of Kaira v. Chunilal to claim exemption under section 19D of the Court-Fees Act (and Schedule III). The Assistant Judge granted the letters but directed payment of Court-fees on the valuation prepared by the Government Pleader. The petitioners appealed, arguing that the relevant date for exemption is the date of Punjalal's death (when the property was part of the joint family), not the date of application. The Collector (respondent) relied principally on a narrower interpretation of section 19D and on observations in Kashinath Parsharam v. Gouravabai to support the Assistant Judge's view.

Legal Issues Presented

Whether the Court should follow the prior ruling in The Collector of Kaira v. Chunilal, as to the interpretation of section 19D of the Court-Fees Act and Schedule III, in respect of joint family property that stands in the deceased's name.
Whether the material date for determining exemption from Court-fees under section 19D is the date of the deceased's death (immediately after death) or the date of application for letters of administration.
Whether property that formed part of a joint family estate and stood in the deceased's name is to be treated as "property whereof or whereto the deceased was possessed or entitled either wholly or partially as a trustee" within the meaning of section 19D, thereby attracting exemption.
Whether, alternatively, if the deceased had a partial share or limited beneficial interest, Court-fees should be payable proportionally (for example, for one-third of the estate) as contended by the respondent.

Arguments of the Parties

Appellants' Arguments

The material date for deciding the entitlement to exemption under section 19D is the date immediately after the intestate's death, not the date of application for letters of administration; Section 14 of the Probate and Administration Act supports that the administrator steps into the intestate's position as if administration had been granted at once after death.
The decision in The Collector of Kaira v. Chunilal correctly interpreted section 19D and should be followed; the language of section 19D and Schedule III is broad enough to include joint family cases where a member holds property in his name but the beneficial interest ceases on his death and survives to co-parceners.
There is no real conflict between the wording of the Schedule and the wording of the section; past practice and judicial interpretation (including In the Goods of Pokurmull Augurwallah and The Collector of Kaira v. Chunilal) support a liberal interpretation in favour of exemption.
Observations of Hayward J. in Kashinath Parsharam v. Gouravabai (p. 254) can be read as supporting the appellants' position rather than contradicting it.
Because the section was enacted in 1875 and has been consistently interpreted and applied in the appellants' favour over many years, and the Legislature has not amended it, a departure from established practice is inappropriate.

Respondent's (Collector's) Arguments

The ruling in The Collector of Kaira v. Chunilal should not be followed because, at the date of application, the property was no longer joint but had been divided and was severally owned by the petitioners; therefore Court-fees should be payable.
Section 19D has been misinterpreted by the appellants and by the earlier ruling; Punjalal did not hold the shares wholly or partially "on trust" within the meaning of section 19D, as he was beneficially interested in his own right even though other family members had interest.
Even if Punjalal had not been wholly interested, at least to the extent of his own share he was interested beneficially and therefore Court-fees ought to be payable in respect of that share (for example, one-third of the property for which letters are sought).
The Advocate-General relied on observations in Kashinath Parsharam v. Gouravabai and on textual words in section 19D and Schedule III to support a narrower reading of the exemption.
Cases such as In the Goods of Brindabun Ghose and In the matter of Desu Manavala Chetty were relied upon to sustain the contention that fees are payable on the beneficial share of the deceased.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
The Collector of Kaira v. Chunilal	Interpretation of section 19D of the Court-Fees Act as applying to joint family property standing in the deceased's name (Bombay decision, 1904); treated as establishing that such property can be regarded as property of which the deceased was possessed or entitled as a trustee for the purposes of exemption.	The Court upheld and followed this decision as correctly interpreting section 19D and applied it to allow the appeal and delete the lower Court's directions for payment of Court-fees.
Kashinath Parsharam v. Gouravabai	Observations questioned the broad view; relied upon by the Advocate-General to support a narrower interpretation of section 19D and Schedule III.	The Court noted that some observations in that case are against the view adopted in The Collector of Kaira v. Chunilal, but concluded that Hayward J.'s remarks (p. 254) do not necessarily conflict with the view followed here and did not find Kashinath's contrary opinion persuasive enough to displace earlier practice.
In the Goods of Brindabun Ghose	Authority relied upon by the Advocate-General for the proposition that court-fees may be payable on the deceased's beneficial share.	The Court acknowledged reliance upon this case by the respondent but ultimately found the broader interpretation of section 19D (as in Collector of Kaira) to be correct; the Brindabun Ghose line did not dictate the outcome here.
In the matter of Desu Manavala Chetty	Authority cited by respondent for paying fees on a beneficial share of the deceased.	Similar to Brindabun Ghose: the Court considered but did not allow these authorities to override the established practice and the construction adopted in Collector of Kaira.
In the Goods of Pokurmull Augurwallah	Decision representing the practice in Bengal, interpreted as supporting exemption in joint family cases.	The Court treated this as supporting the appellants' position and as part of a body of authority and practice favouring the broader interpretation of section 19D.
Bank of Bombay v. Ambalal Sarabkai (Ambalal Sarabhai)	Referenced in relation to statutory provisions (Presidency Banks and Companies Acts) and the possibility of cases where limited legal rights, distinct from beneficial interests, might be involved.	The Court noted Hayward J.'s reference to this case as illustrating a different kind of situation (limited statutory rights) but treated it as not controlling the present case; it helped frame a distinction but did not alter the result.

Court's Reasoning and Analysis

The Court's analysis proceeded in distinct steps, following the issues as presented:

Preliminary legal point: The Court accepted that the letters of administration confer upon the administrator the rights of the intestate "as effectually as if the administration had been granted at the moment after his death" (relying on section 14 of the Probate and Administration Act). Consequently, the correct date for examining the character of the property is the moment after death, not the later date of the application.
Two-fold respondent contention: The Advocate-General's main points were (a) that the deceased did not hold the shares on trust within the meaning of section 19D because he had a beneficial interest in his own right, and (b) that, at least to the extent of his own share, fees ought to be payable (i.e., proportional liability).
Construction of section 19D and Schedule III: The Bench examined the meaning of expressions such as "property whereof or whereto the deceased was possessed or entitled either wholly or partially as a trustee" and the Schedule wording "property held in trust not beneficially or with a general power to confer a beneficial interest." The Court reasoned that, in the context of Mitakshara joint family property in that Presidency, the nominal holder (a co-parcener) may be legally possessed of property but his beneficial interest is limited by co-parceners' interests and disappears on his death; thus, at the date of death the deceased's legal title exists without any beneficial interest.
Principle of liberal construction: The Court applied the rule that exceptions (here, words confining the operation of exemption) should receive a liberal construction in favour of the subject. On that basis the Court considered it appropriate to construe section 19D and the Schedule to include joint family property held by a co-parcener for the joint benefit of himself and others, where his beneficial interest ceases on death.
Authority and practice: The Court evaluated precedent and long-standing practice. It observed that Calcutta (from 1896) and Bombay (from 1904, via The Collector of Kaira v. Chunilal) had accepted the broader construction and that the practice on the Original Side of the Court was of long standing. Although Kashinath Parsharam contained observations adverse to that view, the Court doubted that they were incompatible with the position adopted and did not find them sufficient to overturn prior conclusions. The Court also considered and rejected the alternative Madras reasoning that limited alienation powers could change the character of the property.
Legislative acquiescence: Noting that the section (enacted in 1875) had been interpreted and practiced in a particular way for many years and that the Legislature had not amended it to change that interpretation, the Court regarded continuation of that practice as appropriate.
Conclusion of analysis: Bringing together the textual construction, rule of interpretation, precedential support, and legislative inaction, the Court concluded that section 19D had been correctly interpreted in The Collector of Kaira v. Chunilal and that joint family property of the character before the Court falls within the exemption.

Holding and Implications

Holding: The appeal was allowed. The Court held that the interpretation of section 19D adopted in The Collector of Kaira v. Chunilal is correct and applicable. The decree of the lower Court was modified by deleting the directions as to payment of Court-fees. The appellants were awarded costs throughout and any amount of Court-fees already paid was to be refunded.

Implications:

Direct effect: The petitioners (appellants) succeed — they are exempt from payment of the Court-fees on the shares in question, and any fees paid are to be refunded. The appellants were given costs throughout.
Precedential effect: The Court expressly affirmed and followed the prior decision in The Collector of Kaira v. Chunilal (Bombay, 1904) and relied on long-standing practice and earlier Calcutta decisions. The opinion notes that the established interpretation and practice has the sanction of judicial interpretation and legislative acquiescence; the Court did not purport to create a new precedent beyond accepting and applying that established line of authority.
Limitations: The Court rejected alternative reasoning (including the Madras view that limited powers of alienation alter the character of joint property) for the purposes of this appeal; it did not expand the law beyond the specific reasoning applied to joint family property as described.

Appeal allowed.

Show all summary ...

Shah, AG.C.J:— This appeal came on for hearing before my brother Coyajee and myself; but as we were invited to reconsider the decision in The Collector of Kaira v. Chunilal it was ordered to be heard by this Bench. We have now heard the appeal and the principal point argued is whether the said ruling is to be followed or not.

The appeal arises in this way:—

Sheth Punjalal Amritlal of Prantij died on May 15, 1916, leaving two sons, Keshavlal and Kodarlal. During his life-time they formed a joint family. On his death the joint estate survived to his two sons. The estate included certain shares in various companies-registered under the Indian Companies Act, which were in the name of Punjalal. The sons subsequently effected a partition of the whole estate in 1920, and as a result divided among other things the beneficial interest in the shares. They applied for limited letters of administration to the estate of their father relating to the said shares, as without such letters they could not be accepted as his legal representatives in respect of these shares. There was no dispute about the right to the letters of administration but there was a dispute as to their liability to pay the Court-fees on the value of the shares.

The petitioners relied upon the decision in The Collector of Kaira v. Chunilal as entitling them to exemption from payment under the Court-Fees Act. On behalf of the Collector of Ahmedabad it was contended that the ruling did not apply as at the date of the application the property was not joint but divided and severally owned by the two petitioners. The learned Assistant Judge accepted the contention of the Government Pleader and while granting the limited letters of administration as prayed directed Court-fees to be paid on the valuation of the shares as made by the Government Pleader. The petitioners have appealed on the ground that the lower Court has erred in not applying the decision in Collector of Kaira v. Chunilal, as the material date is the date of the Punjalal's death and not the date of application. On behalf of the respondent (the Collector of Ahmedabad), the learned Advocate-General has not seriously contested the correctness of the position thus taken up by the petitioners; but he has sought to support the order of the lower Court principally on the ground that section 19D of the Court-Fees Act has not been correctly interpreted by this Court in the said decision. In support of this contention, he has relied upon the observations in Kashinath Parsharam v. Gouravabai and the words of section 19D and Schedule III of the Court Fees Act.

As regards the ground upon which the lower Court has based its decision, it is clear that it cannot be supported and the learned Advocate-General has rightly refrained from pressing it. The letters of administration entitle the administrator to all rights belonging to the intestate as effectually as if the administration had been granted at the moment after his death. Section 14 of the Probate and Administration Act is clear on this point. The question is whether at the moment after his death the property was joint family property and not whether it was so at the date of the application. It was not contended in the lower Court, and it is not contended before us, that at the date of Punjalal's death it was not part of the joint family property. The allegation of the petitioners on this point was not challenged.

This brings me to the real point of importance raised on behalf of the respondent. The point is two-fold: first, it is urged that Punjalal did not hold the shares wholly or partially on trust within the meaning of section 19D and that he was beneficially interested therein in his own right though other members of the joint family were equally interested and though on his death the whole beneficial interest survived to the two sons. Reliance is placed upon the words used in Schedule III of the Act: secondly, it is urged that even if Punjalal was not wholly interested in the shares at least to the extent of his share he was interested and the Court-fees ought to be payable in respect of one-third of the property for which the letters of administration are sought.

In support of the first branch of the argument the learned Advocate-General relies upon the observations in Kashinath Parsharam v. Gouravabai. In respect of the second branch of the argument he relies upon the case of In the Goods of Brindabun Ghose and In the matter of Desu Manavala Chetty.

By way of answer to these contentions the learned counsel for the appellants contends that the words of section 19D are comprehensive enough to include the case of a joint minder of a family holding the property in his name who has a partial interest in the property during his life-time, which (interest) ceases altogether on his death and survives to the survivors, that there is no conflict between the wording of the Schedule and the wording of the section and that the cases of In the Goods of Pokurmull Augurwallah and The Collector of Kaira v. Chunilal are rightly decided. Further, he relies upon the observations of Hayward J. in Kashinath Parsharam v. Gouravabai at p. 254 of the report as really supporting his contention. Further, it is urged that as this section which was enacted in 1875 has been interpreted in favour of the subject in a particular manner, as the practice in this Court has been uniform us stated in The Collector of Kaira v. Chunilal, and as the Legislature has not considered it right to amend the section in the sense now contended for, it is not right that a narrower interpretation should be placed upon the exemption and a departure made from the established practice extending over a number of years.

We have considered the arguments urged on both aides, and my view is that section 19D has been correctly interpreted by this Court in The Collector of Kaira v. Chunilal and that even if there be a doubt as to the true meaning of the expression “property whereof or whereto the deceased was possessed or entitled either wholly or partially as a trustee” or the expression “property held in trust not beneficially or with a general power to confer a beneficial interest” the interpretation accepted in Calcutta so far back as 1896 and in Bombay so far back as 1904 and acquiesced in by the Legislature should now be accepted as representing the true scope of the said expressions. First as regards the meaning of the expression in its application to joint family property with the incident of survivorship governed by the Mitakshara and the Mayukha in this Presidency it must be remembered that while the holder, a member of the family, in one sense is beneficially interested in the whole, the other members of the co-parcenary are also beneficially interested in the whole and the beneficial interest of the holder is limited by the extent of the interest of other members. Further, that interest disappears altogether on his death; and the survivors become the sole beneficiaries in the estate which stands in the name of the deceased person. On his death what is called his estate is no estate of his; and the legal title which still continues in the dead man is really the title of a man, whose beneficial interest in the property on his death is nothing. As regards property of this character it could properly be said that the deceased died possessed of it or was entitled to it either wholly or partially as a trustee within the meaning of section 19D. I do not think that the words used in the Schedule, viz., “property held in trust not beneficially or with general power to confer a beneficial interest” conflict with this view. I do not say that the point is free from difficulty. But if the rule of construction to be applied to an enactment of this nature is, as I think it should be, that a liberal construction ought to be given to words of exception confining the operation of the duty, I think that the words have been rightly construed to cover a case of joint family property held by a co-parcener for the joint benefit of himself and others and in which his beneficial interest ceases on his death, so that at the date of his death his legal title or possession is without any beneficial interest therein. He would have no power on his death to confer a beneficial interest as he would have for instance in the case of his self-acquired property.

I have so far considered the point apart from authority. But when I turn to the decided cases, the weight of authority seems to be in support of this view. In Bengal The practice has been in accordance with the decision of In the Goods of Pokurmull Augurwallah at least since the date of that decision. In Bombay the question was fully examined by Jenkins C.J in 1904, and the conclusion with the reasons therefor has been stated in the case of The Collector of Kaira v. Chunilal The practice on the Original Side of this Court has been mentioned in that case as being of long standing; and in this Presidency there has been no contrary decision. The observations in Kashinath Parsharam v. Gouravahai are no doubt against this view. I agree that Beaman J.'s view is in conflict with the opinion expressed by Jenkins C.J But I doubt whether the observations of Hayward J. can be read in that sense: for at p. 254 of the report he observes as follows:—

“The case might, no doubt, have been different if the estate specified had been not the whole joint property but only a limited interest in the joint property—if, for instance, the estate specified has excluded the beneficial interests of the members of the family in the property and had strictly been limited to the legal right to parade as proprietor under such statutory provisions as sections 22 and 23 of the Presidency Banks Act, 1876, or sections 30(2), 33 and clauses 21 and 22 of Table A of the 1st Schedule of the Companies Act, 1913. The possibility of such a case would appear from the remarks in the case of Bank of Bombay v. Ambalal Sarabkai. That would perhaps have been the appropriate manner of meeting the difficulties presented by such statutory provisions as those of the Presidency Banks and Companies Acts”.

When the present application is looked at in its true legal bearing in substance it is really an application of the nature referred to by Hayward J. and it is not unlikely that the remarks in Bank of Bombay v. Ambalal Sarabhai, referred to by Hayward J., were present to the mind of the learned Chief Justice when he decided the later case now under consideration. With great respect for the contrary opinion expressed in Kashinath's case, I think that the decision in The Collector of Kaira v. Chunilal is right.

The view of the Madras High Court proceeds on somewhat different lines; and the learned Advocate-General has pressed for that view in the alternative. I have considered the ratio decidendi in that case. But I am unable to hold that the fact that a joint sharer has power to alienate his share for consideration in this Presidency could alter the character of the property. If a sharer simply alienates his share for consideration and dies the next day without effecting partition, the purchaser would not get his share, as it would cease to exist before it is seized. He cannot make a gift of his undivided share; and he cannot dispose of it by will I am unable to hold that such limited power of dealing with the property can make any difference in the character of the deceased's title to or possession of the property at the time of his death. With great respect for the learned Judges I am unable to accept the ratio decidendi in that case.

Lastly, even assuming that the scope of the expression used in section 19D and the Schedule is not clear, it cannot be said that it is so clear the other way that we should now decide to depart from the practice, which has been uniformly followed in this Presidency for so many years and which has the sanction of judicial interpretation put upon the Court-Fees Act so far back as 1904.

During the interval the Legislature has not indicated that that is not consistent with the true intention of the Legislature. Having regard to the history of the legislation on this point and its application for many years, I do not think that the view taken in The Collector of Kaira v. Chunilal can be held to be wrong.

I would, therefore, allow the appeal and modify the decree of the lower Court by deleting the directions as to payment of Court-fees. The appellants to have their costs throughout. The amount, if paid, to be refunded.

Crump, J.:— I agree.

Coyajee, J.:— I agree.