Order of the Court was made by Somnath Iyer J.:—

On July 8, 1958, one Jeachim Bernard Pinto died and his wife who is the petitioner before us applied for the probate of his will. That application was presented on August 16, 1960. She valued the estate of the deceased which was likely to come to her hands at Rs. 44,064-16 nP., and the probate was granted on that basis.

On June 7, 1961, an application was presented by the State of Mysore represented by the Deputy Commissioner of South Kanara under Section 56(5) and Section 59 of the Mysore Court Fees and Suits Valuation Act, 1958. The power of the District Judge who had granted the probate was invoked so that the true value of the estate might be estimated. All that was stated in that application was that the true value of the estate was Rs. 76,329,-24 nP. The District Judge was of the opinion that the value of the estate was Rs. 99,750-16 nP.

In reaching the conclusion, the District Judge altered the values of many of the items of properties which belonged to the deceased and was of the view that Rs. 1,05,592 was the value of those items. From this, he deducted a sum of Rs. 5,841-84 nP. which represented allowable deductions and deduced the net value of the estate to be Rs. 99,750-16 nP.

It was on this basis that the petitioner was called upon to amend her valuation and to pay the deficient court fee, and, in doing so, the District Judge recorded a finding which was not sought by the State in its application. When the petitioner estimated the value of the estate, she deducted from that value a sum of Rs. 30,000 which had been paid towards the estate duty payable in respect of that estate. That this was a legitimate deduction claimable by the petitioner was not disputed by the State. But the District Judge never the less thought that deduction was an illegitimate deduction and that he had the power to disallow it in the exercise of the power conferred on him by Section 57 of the Mysore Court Fees and Suits Valuation Act.

In this revision petition presented by the petitioner, the only two submissions made are these:

(a) That the estimate of the value of item 3 made by the District Judge was excessive and

(b) that the disallowance of the estate duty was without jurisdiction and impermissible.

The estimate made by the petitioner of the value of her husband's share in item 3 was Rs. 10,000. But the District Judge, estimated it at Rs. 33,686. In the opinion of the District Judge, the aggregate rent realised from item 3 in the year 1960 was Rs. 415 and that rent was capitalised by the adoption of the twenty-year rule, and, it was on that basis that the District Judge determined the value of the testator's interest in item 3 to be Rs. 33,686.

The District Judge was quite right in observing that the material date for the determination of the market value of the testator's interest in item 3 was August 16, 1960, when the application for a probate was made by his wife. That became the material date by virtue of foe provisions of Section 53(1)(b) of the Mysore Court-Fees and Suits Valuation Act, which provides that where an application for the grant of a probate is made after the expiry of one year of the date of death of the deceased, the fee chargeable is on the market value of the estate on the date of the application.

That August 16, 1960, was the date on which the market value of the estate has to be determined is not disputed by Mr. Karanth appearing for the petitioner what he, however, assails is the estimation made by the District Judge that a sum of Rs. 415 in the aggregate was the rent realised on August 16, 1960, from item 3.

The only witness who gave evidence before the District Judge was a clerk of the petitioner. His evidence was that in the months of November and December 1958, and January 1959 a sum of Rs. 9,150 was expended by the petitioner over improvements to item 3. He proceeded to state that in the condition in which item 3 was before those improvements were made, the aggregate rent realised from that item was Rs. 96 a month, while the aggregate rent realised after those improvements were made was Rs. 415 a month. In corroboration of this evidence he produced Exhibit B-4 an extract from the account books maintained and he stated that those entries had been shown not only to the Deputy Commissioner but also to the Estate Duty authorities. This part of the evidence given by the clerk was not subjected to any cross-examination. All that was elicited in the cross-examination of this witness was that, in the year 1943 a sum of Rs. 21,014 was paid to a certain Gillant Pinto and that there was a sale deed in 1944.

On this part of the testimony, the argument constructed by Mr. Government Pleader was that the sale deed referred to by the clerk was the sale deed under which item 3 was purchased, and that if in the year 1944, item 3 was purchased for Rs. 21,014 it was surely three times as valuable in the year 1960. But of that there is no evidence.

The evidence given by the witnesses was that in the years 1958 and 1959 improvements were made to the property which was fetching only a rent of Rs. 96 a month. It is clear that the rents realised after such improvements, can have no relevance since the estate to be valued for court-fee is the estate left by the deceased and in the condition in which he left it, and not what it became after it was improved by his heirs. Since higher rents were paid only after improvements, we should assume that if no improvements bad been made, no more than the old rents could have been realised. If a sum of Rs. 960 is taken as the net aggregate annual rent realised, after excluding from consideration two months' rent for repairs and taxes, and, if it is capitalised by the adoption of the twenty year rule, it would follow that even on August 16, 1960, the interest of the deceased in item 3 was worth not more than Rs. 19,200. Since the deceased had only a half share in the property, the petitioner's estimate of that half share at Rs. 10,000 could not therefore have been considered by the District Judge to be for any reason faulty or defective.

On the contrary, the great infirmity in the finding of the District Judge is that he entirely missed the importance of the evidence given by the petitioner's clerk. Although in one part of his order the District Judge did refer to some parts of the evidence given by that clerk, there was no adequate discussion of that evidence or of its importance such as what I have referred to in this order.

We must, therefore, in my opinion, reverse the finding of the District Judge that the half share of the testator in item 3 was of the value of Rs. 33,686 and, substitute a finding in its place that half share was properly valued by the petitioner in her application for the grant of probate.

What I should next consider is the correctness of the view expressed by the District Judge, that in the determination of the value of the estate of the deceased, the estate duty paid in respect of such estate must be excluded from consideration. It was not disputed that a sum of Rs. 30,000 had been paid as estate duty by the petitioner who was the executor under her husband's will. But the District Judge was of the view that the value of the estate relevant for the purpose of computation of the Court Fees is its value on the date of the death of the deceased which did not diminish by reason of the payment of the estate duty on it.

The correctness of this view depends upon the interpretation to be placed upon the relevant provisions of the Court-fee and Suits Valuation Act and the Estate Duty Act. Chapter VI of the Court Fees and Suits Valuation Act contains the provisions regulating the computation of the court fee payable on an application for the grant of probate. Section 52 reads:

“52. Application or probate for letters of administration—(1) Every application for the grant of probate or letters of administration shall be accompanied by a valuation of the estate in duplicate in the from set forth in part I of Schedule III.

Section 53 states that the fee chargeable for the grant of probate is the fee prescribed by Article 6 of Schedule I computed in manner specified in clauses (a) and (b) of sub-section (1) of that section. The relevant part of Section 53 is:

“53 Levy of fee.—(1) The fee chargeable for the grant of probate or letters of administration shall comprise—

A fee at the rate or rates prescribed in Article 6 of Schedule, I computed—

(a) Where the application is made within one year of the date of death of the deceased, on the market value of the estate on such date; or

(b) where the application is made after the expiry of one year from such date, on the market value of the estate on the date of the application:

Since clause (b) in the clause applicable to the case before us, the court fee which the petitioner was required to pay was that payable on the market value of the estate on the date of the application. Although the word ‘estate’ occurring in Section 53 is not described with any particularity in that section, what that estate is ascertainable from Section 52 which says that there shall be a valuation of the estate in duplicate in the form set forth in Part I of Schedule III. So, it becomes clear that the market value relevant for clause (b) of Section 53(10) is the market value of the estate whose valuation has to be made in the form set forth in Fart I of Schedule III.

Part I of Schedule III consists of four paragraphs and the first paragraph is what is of importance. That paragraph reads:

Schedule III

Part I

1. I(A.B) …solemnly affirm/make oath and say that I am the executor (or one of the ex-cutes or one of the next of kin) of…………………deceased and that I have truly set forth in Annexure A to this Form of Valuation all the estate of which the abovenamed deceased died possessed or to which he was entitled at the time of death, and which has come, or is likely to come, to my hands.

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It is clear from this paragraph of Part I of Schedule III read with Sections 52 and 53 of the Act that the estate on the basis of whose market value the court fee has to be computed is the estate of which the deceased died possessed or to which he was entitled at the time of his death and which has come or was likely to come to the hands of the executor. The estate whose market value his to be determined is nut merely of the estate of which the deceased died possessed or to which he was entitled when he died, but of the estate which has come or was likely to come to the hands of the executor. So, even if there was some estate which was in the possession of the deceased or to which he was entitled at the time of his death if that estate had not come or was not likely to come to the hands of the executor, it is not necessary for him to include that estate in the valuation which he is required to make by Section 52 of the Act.

It is thus plain that under the provisions of Section 53 of the Court Fees Act, the only court fees payable by the executor who applies for a probate is that payable on the market value of the estate which has come or was likely to come into his hands provided that estate either belonged to the deceased or was in his possession when he died. The estimated value to which Annexure A in Schedule III refers is, it is clear, the estimated value of only that estate.

It is not disputed that the estate duty paid by the petitioner was that payable in respect of the estate which came or was likely to come to her hands. But the more important question is what was the market value on August 15, 1960, of the estate which came into her hands. It is in the determination of this question that the provisions of the Estate Duty Act become relevant.

Section 2(7) defines ‘estate duty’ as the estate duty under the Act. Section 5 which is the charging section states that in the case of every person dying after commencement of the Act, a duty called ‘estate duty’ at the rates fixed in accordance with Section 35, shall be eligible in respect of all property which passes on the death of such person. The expression ‘property passing on the death’ is defined by Section 2(16) of the Act, and, Section 16 declares that property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death.

The second schedule to the Act prescribes the rates of the estate duty. Section 74(1) reads:

Eastate Duty a first charge on property liable hereto.

74.(1) Subject to the provisions of Section 19, the estate duty payable in respect of property, movable or immovable, passing on the death of the deceased, shall be a first charge on the immovable property so passing (including agricultural land) in whomsoever it may vest on his death after the debts and incumbrances allowable under Part VI of this Act; and any private transfer or delivery of such property shall be void against any claim in respect of such estate duty.

Section 53 provides that where any property passes on the death of the deceased every legal representative to whom such property so passes for any beneficial interest in possession or in whom any interest in the property so passing is at any time vested, shall, among others, be accountable for the whole of the property so passing. Section 2(12) defines a “legal representative” as including an executor.

The argument maintained by Mr. Karanth was that if from these provisions it is clear that the estate duty paid by the petitioner was a charge on the properties which vested in her capacity as an executor under the will of her husband, and that estate duty became payable on the passing of the property by death, the property which vested in the executor was the property burdened with the liability to pay the estate duty and its market value which is relevant for the purpose of Section 53 of the Court. Fees and Suits Valuation Act must necessarily be the value of the estate at the time of death reduced by the sum payable by way of estate duty.

The competing argument pressed on us by Mr. Government Pleader was that on the death of the deceased, there was the passing of the property and the vesting of it in the executor and that the market value of the property which so vested was the market value at the time of death and not its value which abated by reason of the charge created by section 74 of the Estate Duty Act in respect of the liability for the payment of estate duty.

It seems to me that sustenance for the conclusion that the market value of the estate which is relevant for the Court-Fees and Suits Valuation Act is the market value which takes into account the liability to pay the estate duty is what can be derived from the provisions of Sections 52 and 53 of the Court-Fees and Suits Valuation Act when they are read with Part I of Schedule III. As already notified, the determination of the market value which Section 53 enjoins is the determination of the market value of the estate which has come or was likely to come into the hands of the executor and I have no doubt in my mind that when it comes to the hands of the executor it is an estate which is already burdened with the liability to pay the estate duty. That, in my opinion, is the clear meaning of the reference to property which passes on the death of the deceased, contained in the charging section which is Section 5 of the Act. The scheme of the Estate Duty Act and of its provisions makes it clear that immediately on the death of a person, estate duty becomes eligable in respect of his property which passes on his death. The liability comes into being even before it passes and what brings into existence that liability is the death of the person to whom the property belonged. In that situation, to whomsoever the property may pass, the property which so passes is the property on which the liability for the payment of estate duty had already become fastened, and, it is that property with the burden whose market value has to be determined under the provisions of Section 53 of the Courts Fees and Suits Valuation Act. When the market value is so determined, it becomes clear that the market value would plainly be less than the market value at the time of the death of the deceased to the extent of the estate duty which it is liable to pay.

That this is the correct way of understanding the provisions of the Estate Duty Act is what can be seen the pronouncement of the House of Lords in Wimans v. Attorney-General . 1910 Appeal Cases 27; 30., in which Lord Lereburu L.C observed:

“Estate duty fails upon the property passing upon a death, apart from its destination.” (page 30).

Lord Atkinson made a clearer elucidation, and he said this:

“Being physically situated in England at the time of their owner's death, they were subject to English law and jurisdiction of English Courts, and taxes might therefore prima frcie be leviable upon them. The property in them undoubtedly passed out of the deceased at the time of his death. To whom it passed, who is to succeed to it, or who is to enjoy it, are matters to which the 1st section of the Finance Act of 1894 is not directed. (page 31).

It should be pointed out that the first section of the English Finance Act of 1894 was the statutory provision under which estate duty was imposed in the same way in which our Estate Duty Act imposes it.

Lord Shaw of Dunfermline made a further exposition, and this is what he said:

“Estate duty is of a different character; the levy and payment thereof occur not at the point of accession to property, but of the passing of property by the death of a testator. The statute provides for graduation of rate according to the magnitude of the estate thus passing at death.” (Page 47).

It is a well settled principle that an executor is a person in whom the property of the deceased vests for administration which is confided to him by the will. When the property vests in him in that way under the provisions of the will, if there is a liability for the payment of estate duty, that liability descends to the executor whose duty it is to discharge the obligation. As Lord Atkinson pointed out in Wimans' case

“The Finance Act of 1894, like the Victorian statute considered is the case of Blackwood v. The Queen . 1882 8 App. case. 82, 97., imposes a “tax payable by an executor as a condition precedent to the issue and efficacy of the probate necessary for his action, out of the estate while it is in bulk, and before distribution or administration has commenced.” (page 34).

It is thus clear that the property which vests in the executor for distribution or administration is a property which is burdened with the liability to pay estate duty, and, it is the market value of that property which should constitute the basis for the computation of the court-fee payable under Section 53 of the Act, it is difficult to understand how the determination of such market value can discard or ignore the liability on the property or how the determination of the market value can refuse to take into account that liability or the charge for its enforcement.

It is seen from Section 44 of the Estate Duty Act that even in the determination of the estate duty, incumbrances on the property created by the deceased cannot be excluded from consideration. Although that section of the Estate Duty Act has really no relevance to the computation of the court fee payable on an application for the grant of a probate, there is implicit in Section 53 the duty to exclude from the market value of the estate at the time of the death of the deceased the estate duty payable in respect of it. No satisfactory or accurate determination of the market value can ever be possible without such attenuation.

What is required to be done for the ascertainment of such market value is to ascertain the price which a willing purchaser would pay for the property which is burdened with the liability to pay the estate duty. It being clear that no willing purchaser would pay a price which refuses to take into account the liability on the property, it should necessarily follow that the estate duty payable in respect of the property must necessarily be deducted from the market value at death.

I do not see anything in Section 50 of the Estate Duty Act on which Mr. Government Pleader placed reliance supporting the contrary view. All that it provides is that if court-fees has been paid for obtaining probate, letters of administration or a succession certificate in respect of property on which estate duty is payable under the Act, the estate duty so payable shall be reduced by an amount which is equal to a moiety of the Court-fee so paid. This statutory provision has no other effect than to clothe the person who had paid the court-fee to claim a refund of half the court-fee paid by him out of the estate duty payable under the Act. There is nothing in this action justifying the view that in the determination of the market value of the estate, the estate duty payable in respect of it is an irrelevant factor.

There is likewise, nothing in Annexure B to Part I of Schedule III to the Court-Fees and Suits Valuation Act which authorises an executor who applies for a probate to deduct from the valuation to be made by him, the debts of the deceased from the value of the estate in order to arrive at the net value of estate. On the basis that this part of Schedule III and on the basis of the provisions of Section 53(2) of the Court-Fees and the State. But, it is however clear that in substance, the application is one made by the Deputy Commissioner, and so, was not liable to be rejected by the District Judge on that ground.

This revision petition is allowed and the order made by the District Judge is set aside to the extent indicated. The only amendment which the petitioner should now make of the valuation is to alter the valuation from Rs. 44,064-16 nP. to Rs. 46,064-16 nP. since it is admitted that she is bound to make this alteration. We direct the petitioner, in modification of the order of the District Judge, to pay deficient court-fee only on this basis and on no other. A month's time is granted for the payment of this court-fee if the enhanced court-fee directed by the District Judge has not already been paid. If the court fees has already been paid pursuant the order of the District Judge, the excess court fee shall be refunded to the petitioner.

In regard to costs, we direct each party to bear her or its own costs in both the Courts.

Kalagate, J.:—I agree.