HIGH COURT OF MADRAS
P.N. George Wilson versus State
W.A. NO. 1197 OF 2012
M.P. NO. 1 OF 2012
JULY 17, 2012
Animadverting upon the order dated 01.11.2011 in W.P.No.23719 of 2008 passed by the Learned Single Judge, the Appellant/Petitioner has projected the present Writ Appeal.
2. The Learned Single Judge, while passing the order in W.P.No.23719 of 2008 on 01.11.2011 has, among other things, observed that all the orders passed by the Respondents are perfectly legal and valid and the document in question could be charged in stamp duty under Article 58 and treating it as a Settlement Deed. However, the Learned Single Judge on consideration of the facts and circumstances of the case, reduced the penalty imposed to Rs.5/- and consequently, dismissed the Writ Petition without costs.
3. The Learned Counsel for the Appellant/Petitioner submits that the Appellant/Petitioner had created a Trust for the purpose of maintenance of his Family Graveyard and therefore, the Learned Single Judge ought to have held that the Deed of Declaration of Trust dated 14.07.2003 would fall under Art.64 of the Indian Stamp Act, 1899 and not under Section 2(24) of the said Act.
4.The Learned Counsel for the Appellant/Petitioner urges before this Court that Section 2(24) of the Indian Stamp Act, 1899 is applicable only if there is an instrument which transfers the property to any religious or charitable purpose and in that event, the stamp duty is payable as per Art.58 of the Indian Stamp Act.
5. Advancing his arguments, it is the submission of the Learned Counsel for the Appellant/Petitioner that the Deed of Declaration of Trust, dated 14.07.2003 also does not result in distribution of the property and as such neither Clause (a) nor Clause(b) nor Clause (c)of Section 2(24) of the Indian Stamp Act is attracted. Therefore, the order of the Learned Single Judge dated 01.11.2011 in dismissing the W.P.No.23719 of 2008 filed by the Appellant/Petitioner is to be set aside in the interest of justice.
6. To lend support to the contention that the Deed of Declaration of Trust, dated 14.07.2003 is chargeable to stamp duty as per Art.64(a) of the Indian Stamp Act, 1899 and not as per Art.58 (a) as a ‘settlement’ as defined in Section 2(24) of the Act, the Learned Counsel for the Appellant cites the Full Bench decision of this Court in The Chief Controlling Revenue Authority, Board of Revenue v. V.T. Ranganathan Pillai AIR 1981 Madras 193 (Full Bench). In this case, A document purporting to be a trust deed was executed. The object of creating the trust was to preserve the properties for the benefit of testator respondent and the members of the family. There were some crucial sentences in the deed. One such sentence was that if any one of his children became a major, the trustee was under an obligation to entrust the trusteeship to that major so that he could administer the properties for the benefit of himself and the other heirs of the respondent. The document further stated that if before any one of the heirs of the respondent attained majority, the trustee wanted to free himself from the trusteeship, it was open to him to nominate another trustee and hand over the trusteeship to him. The person who thus became a trustee had to perform the obligations and exercise the rights referred to in the trust deed. The document concluded by stating that the testator had no right to either modify or cancel the same.
In those circumstances, it has been held that ‘the document in question was chargeable to stamp duty under Art.64(A) as a declaration of trust and not under Art.58(a) as a settlement as defined in S.2(24) of the Act.’
It is further held in this Judgment. Before a transaction can fall within the scope of definition of settlement in Section 2(24) the property must be made for one or other of the three purposes mentioned in cls.(a), (b) and (c). The document in question is not an agreement in writing to make any disposition. Therefore, it cannot fall within the first limb of the inclusive part of the definition as well. Then it has to be seen whether it can be said to be an instrument recording, whether by way of declaration of trust or otherwise, the terms of any such disposition. The crucial word to be considered in this behalf is the word ‘such’ qualifying the expression ‘disposition’. Therefore, in the inclusive portion of the definition, the expression ‘such disposition’ will undoubtedly govern only the disposition contemplated by clauses (a), (b) or (c) of S.2(24). If the disposition does not fall within the scope of S.2(24) (a), (b) or (c) then the inclusive portion of the definition also will not apply.
7. The Learned Counsel for the Appellant refers to Section 5 of the Indian Trust Act, 1882 which reads as follows:-
‘5. Trust of immovable property:- No trust in relation to immovable property is valid unless declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered, or by the will of the author of the trust or of the trustee.
Trust of movable property:-No trust in relation to movable property is valid unless declared as aforesaid, or unless the ownership of the property is transferred to the trustee.
There rules do not apply where they would operate so as to effectuate a fraud.’
8. He also invites the attention of this Court to Section 6 of the Indian Trust Act, 1882 which reads hereunder:-
‘6. Creation of trust:-Subject to the provisions of Section 5, a trust is created when the author of the trust indicates with reasonable certainty by way words or acts (a) an intention on his part to create thereby a trust, (b) the purpose of the trust, (c) the beneficiary, and (d) the trust-property, and (unless the trust is declared by will or the author of the trust is himself to be the trustee) transfers the trust-property to the trustee etc.,’
9. At this stage, we deem it appropriate to quote Clause 1 of the Trust Deed dated 14.07.2003 which enjoins thus:-
‘1. That the Founder Trustee conveys, transfers and grants unto the trust all and every such property, and assets in the Schedule land TO HAVE AND TO HOLD the same in trust for the objects of trust as described below to be used exclusively for the specific purpose of utilizing and using the said property by allowing the members of the families of the five Trustees to bury them and using it as a graveyard for the said members, erecting graveyards and for carrying such other lawful religious and sacred acts in connection with the said object as mentioned above.’
10. Clause 2 of the aforesaid Trust Deed runs as follows:-
‘2. The Trustees shall have authority and power to accept from time to time grants, donations and gifts in the form of cash or other investments from relation, friends or others, interested in the welfare of the beneficiaries and to hold the same for the objects of the Trust. The same, when received, shall become a part and parcel of the Trust fund and shall be held by the Trustees on the same terms and conditions of the Trust Fund.
(i) Registered Office of the Trust shall be situate at George Villa, Marayapuram, Kappicaud Post and other places as decided by Trustees. To open and operate account with any bank by the managing Trustee or any other person as decided by the majority of the trustees. The trustees may, from time to time, frame rules for the conduct and regulation of the meeting of the trustees.
(ii) The primary source of funds for the trust for the upkeep of the property will be generated from the income from the property. Should this becomes insufficient, the Trustees should contribute the amounts required as decided by majority of them for the upkeep and maintenance of the said Trust property.’
11. It is to be borne in mind that apart from the above two Clauses referred to in the Trust Deed dated 14.07.2003, there are other Clauses mentioned by the founder trustee. It is stated that the trust is a body incorporated under the Trust Registration Act or other statutory provisions which shall be governed by its rules and bye-laws.
12. We aptly cite Section 2(24) of the Indian Stamp Act, 1899 which defines ‘Settlement’ as under:-
(24) Settlement – ‘Settlement’ means any non-testamentary disposition, in writing, of movable or immovable property made-
(a) in consideration of marriage.
(b) for the purpose of distributing property of the settler among his family or those for whom he desires to provide, or for the purpoe of providing for some person dependent on him, or
(c) 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’.
13. It is to be noted that a settlement is an admixture of gift or partition or trust. In Law, a Family Arrangement/Settlement is accepted as a transfer of interest in the property in favour of an individual between whom the Family Arrangement or Settlement is so made. Just because a Deed/Instrument answers the description of a ‘Trust Deed’, it does not cease to be a ‘settlement’ for the purpose of stamp duty, if it answers the description of ‘settlement’ also. As a matter of fact, a Deed of Trust/Trust Deed can also be a settlement deed.
14. We pertinently point out the decision of the Hon’ble Supreme Court in Namburi Basava Subrahmanyam v. Alapati Hymavathi AIR 1996 SC 2220 in paragraph 5, it is laid down as follows:-
‘5. The said recital clearly would indicate that the settlement deed executed on that date is to take effect on that day. She created rights thereunder intended to take effect from that date, the extent of the lands mentioned in the Schedule with the boundaries mentioned thereunder. 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 and vested 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 settle with absolute rights on settlor’s demise. A reading of the documents together with the Schedule would give an indication that she had created right and interest in presenti in favour of her daughter Vimlavathy in respect of the properties mentioned in the schedule with a life estate for her enjoyment during her life time. Thus, it could be construed rightly as a settlement deed but not as a will. Having divested self thereunder, right and title thereunder, she had, thereafter, no right to bequeath the same property in favour of her daughter Hymavathy. The trial Court and the learned single Judge rightly negatived the claim. The Division Bench was not, therefore, correct in law in interfering with the decree of the trial Court.’
15. Indeed, Section 8 of the Transfer of Property Act, 1882 is a rule of construction which avoids speculation as to the particular interest, which was in the mind of a transferor. However, Section 8 is not intended to lay down any rule as to what words are necessary to effect a transfer of any particular kind of property. A document has to be read in its entirety. Real intention of the parties has to be gathered, not merely from what prima facie is stated as the description of the property in the schedule, but from the totality of the recitals in a deed. The intention of the executant is to be gathered from the words employed in a document. Construction of the deed depends upon the language of the recitals, but not on its form or nomenclature. In fact, Law does not permit to pick up a sentence in a document and to construe the same on that score.
16. In order to find out, whether a document is a settlement, gift or a Will, etc., the nature of a document is to be examined, whether it transferred any interest in property in praesenti, or after the demise of an executant.
17. The term ‘disposition’ in Stroud’s Judicial Dictionary is defined as a devise intended to comprehend a mode by which a property can pass, whether by act of parties or by an act of the Law.
18. In Limmer Asphalte Paving Co. v. Commrs. Of Inland Revenue  7 Ex.211, it is held as under:-
In order to determine, whether any, and if any, what stamp duty is chargeable upon an instrument the legal rule is that the real and true meaning of the instrument is to be ascertained; that the description of it given in the instrument itself by the parties is immaterial, even although they may have believed that its effect and operation was to create a security mentioned in the Stamp Act, and they so declare, which was approved by the Hon’ble Supreme Court in the decision in Madras Refineries v. Board of Revenue AIR 1977 SC at p.500.
19. It is to be noted that as per Section 6 of the Indian Stamp Act, 1899 when an instrument falls within the ambit of two or more descriptions mentioned in Schedule I-A, it should be chargeable with the higher of such duties. Therefore, when an instrument is covered both by Art.58 and 64 of the Act, it is chargeable as per Art.58 of the Act, since being higher than the duty to be levied as per Art.64.
20. It is not out of place for this Court at this juncture to refer to the decision in Board of Revenue v. Sridhar, Advocate AIR 1964 Allahabad 537 (Special Bench) at p.538. In this case according to the terms of an instrument the future rental income of the two houses of the donor from the date of execution of the deed was to be utilised by the trustee for the benefit of the various beneficiaries who were all minor children of the donor. Form the date of its execution the two houses would vest in the trustee and so also would vest in him the rental income accruing from these two houses. This rental income, was to be divided among the various beneficiaries who were all minor children of the donor. The nature of the instrument was at issue. In these circumstances, it has been held that :
The instrument was a ‘settlement’ satisfying the requirements of S.2(24) (b). It was clearly a non-testamentary disposition of the property consisting of the future rental income for the purpose of distributing that property of the donor amongst members of his family. This would be so even though the instrument was by way of declaration of trust. The future income or the right to future income could not be excluded from the scope of the word ‘property’ as used in Section 2(24). Even if this instrument were to be treated as containing solely a disposition of the property consisting of the two houses, and not a disposition of the property consisting of the future rental income, the instrument would still be a deed of settlement, because the disposition of the houses in favour of the trustee was clearly for the purpose of providing for the minor children of the donor who ere dependent on him. Narendra Singh Ju Deo v. Junior Secretary, Board of Revenue AIR 1947 All 141 (SB) Diss from.
Thus the instrument was liable to stamp duty as an instrument of settlement under Art.58 of Sch. IB and not under Art.64.
21. In Chief Controlling Revenue Authority v. Dr. H. Narasimhaiah AIR 1991 Kar. 392 (Special Bench), at para No.14, it is held as follows:-
‘The instrument converting a society registered under 1960 Act into a trust and transferring the properties belonging to the Society to the Trust, falls within the meaning of ‘settlement’ as defined in S. 2(1)(q)(iii)of Stamp Act of 1957. The instrument is liable to duty under Art.48 of the Sch.to the Stamp Act of 1957.’
22. We also cite the decision of the Hon’ble Supreme Court in S.N. Mathur v. Board of Revenue  13 SCC 301, in paragraph 12 to 16, wherein it is held as follows:-
‘Merely because an instrument answers the definition of a ‘trust deed’ it does not cease to be a settlement deed for the purpose of stamp duty, if it answers the definition of ‘settlement’ also. It is well settled that all trusts are not settlements, and all settlements are not trusts, but a deed of trust can also be a deed of settlement.
It is evident from the definition of ‘settlement’ in Section 2(24) that any non-testamentary disposition in writing, either of movable or immovable property made for any religious or charitable purpose is a settlement. The definition also makes it clear that even where there is no such disposition in writing, any instrument recording whether by way of declaration of trust or otherwise, the terms of any of such disposition will also be a settlement. It is thus evident that not only instruments which are non-testamentary dispositions of property for any religious or charitable purpose, but also declarations of trust which record the terms of such disposition, are settlements.
‘Disposition’, is a term of wide import which encompasses any devise or mode by which property can pass and includes giving away or giving up by a person of something which was his own. The Supreme Court has also held that the word ‘disposition’ refers to a bilateral or multilateral act of transfer and will not apply to a unilateral act as, for example, when a person treats his individual property as a joint family property. Black’s Law Dictionary defines ‘disposition’ as the act of transferring something to the care or possession of another; or relinquishment or giving up of property.
In this case, the instrument is not termed as a ‘settlement’. It is clearly a declaration of trust and is described as a ‘deed of trust’ But it records the terms of disposition of an immovable property for religious and charitable purposes. The operative portion of the instrument clearly recites that the three donors/founders grant, convey and transfer their property ‘Mathur Atithishala’ unto the trustees (that is the three founders and two others) and also declares that the Trust shall own, possess and manage the same as the absolute owner. The three executants of the trust deed divested themselves of ownership of the property which was transferred to the Trust represented by five trustees. Thus there was a disposition for religious and charitable purposes. It is thus clear that the instrument answers the definition of settlement under Section 2(24) of the Act. As the stamp duty leviable under a deed of settlement under Article 58 is more than the stamp duty leviable in regard to a deed of trust under Article 64, the authorities under the Stamp Act have rightly held that the instrument is chargeable with the higher duty prescribed under Article 58 applicable to a settlement.’
23. It cannot be gain said that Art.58 of the Indian Stamp Act, 1899, has been substituted by Tamil Nadu Act 42 of 1981 which runs hereunder:-
(a) Instrument of (including a deed of dower)-
(i) If the instrument of settlement is in favour of a member or members of a family:
[one rupee for every Rs.100 or part thereof of the market value of the property which is under settlement, subject to the maximum of Rs.10,000:]
Provided that, where an agreement to settle is stamped with the stamp required for an instrument of settlement and an instrument of settlement in pursuance of such agreement is subsequently executed, the duty on such instrument shall not exceed [twenty rupees].
Explanation-For the purpose of Article, the word ‘family’ means father, mother, husband, wife, son, daughter, grandchild. In the case of any one whose personal law permits adoption, ‘father’ shall include an adoptive father, ‘mother’ an adoptive mother, ‘son’ an adopted son and ‘daughter’ an adopted daughter.
(ii) in any other case-
(A) of immovable property situated within the Chennai Metropolitan Planning Area and the Urban agglomeration of Madurai, Coimbatore, Salemand Tiruchirappalli and the City of Tirunelveli.
Eight rupees for every Rs.100 or part thereof of the market value of the property which is the subject matter of settlement.
(B) of immovable property situated in other areas;
Eight rupees for every Rs.100 or part thereof of the market value of the property which is the subject matter of settlement.
(C) of any other property.
Seven rupees for every Rs.100 or part thereof of the market value of the property which is the subject- matter of settlement.
Deed of dower executed on the occasion of a marriage between Muhammadans.
(b) Revocation of-
The same duty as a Bottomry Bond (No.16) for a sum equal to the amount or value of the property concerned, as set forth in the instrument of Revocation, but not exceeding eighty rupees (w.e.f. 1-7-1992) [Rs.60/- prior thereto].
24. As regards the plea of the Appellant/Petitioner that to the Trust Deed dated 14.07.2003 Art. 64 of the Indian Stamp Act, 1899 is applicable, (Since the deed in question pertains to a declaration of or concerning, any property when made by any writing not being a Will and that the same duty as a Bottomry Bond (No.16) for a sum equal amount or value of the property concerned as set forth in the instrument but not exceeding (One hundred and eighty rupees) is chargeable-amended as per Tamil Nadu Act 9 of 2001 w.e.f. 11-07-2001), we hold that Art.64 of the Indian Stamp Act would come into operative play only, where the executant of the instrument makes himself a Trustee and not where he conveys the property to others as Trustee, as per the decision in Sita Ram v. Board of Revenue AIR 1979 Allahabad 301 (Special Bench). Further, in the present case on hand, the property mentioned in the document is transferred to the Trust through the Trust deed dated 14.07.2003.
25. In the present case on hand, the Fourth Respondent/The Chief Controlling Authority, Inspector General of Registration, Chennai-28 passed an order on 31.05.2008 among other things observing that as per the deed the property is transferred to the trust and held that the deed is settlement outside the family and hence stamp duty leviable as per Section 58(a)(ii) and dismissed the revision upholding the orders of the District Registrar.
26. Earlier, the Second Respondent/the District Registrar (Administration), Marthandam in his proceedings No.164/Aa/2004, dated 04.02.2004 addressed to the Appellant has stated that the pending document before the Joint Sub-Registrar II in P.No.21/2003 as per Art.58(a)(2) is a settlement, not between members of the family and held that the stamp duty leviable for the document is Rs.20,472/- and since Rs.180/- has already been paid the deficit stamp duty of Rs.20,292/- is to be paid. Further, the registration charges leviable for the document is Rs. 1,710/- but Rs. 200/- only has been paid as per document and there remains a deficit registration charges of Rs. 1,510/- to be paid and in all a sum of Rs. 22,010/- including penalty of Rs. 208/- is to be paid to the Joint Sub-Registrar II, within 15 days from the receipt of the notice, failing which, proceedings shall be initiated under the Revenue Recovery Act. The Joint Sub-Registrar No.2, Marthandam/third Respondent by his order dated 12.08.2003 has advised the Appellant/Petitioner by stating that since the trust deed created by the Appellant/Petitioner has properties, valued at Rs. 1,16,640/-, a deficit stamp duty of Rs. 14,004/- and deficit registration fees of Rs. 1170/- are to be paid, failing which, further informed that, proceedings under Section 33(A) of the Revenue Recovery Act for realisation of the amount would be initiated.
27. Looking at from any point of view, on an over all assessment of the facts and circumstances of the present case in a cumulative fashion, we come to an inescapable conclusion and hold that the Trust Deed dated 14.07.2003 in issue is chargeable to stamp duty as per Art.58 (ii) of the Indian Stamp Act, 1899 treating it as a Settlement Deed as per Section 2(24) of the Act.
28. Viewed in that perspective, we do not find any material irregularity or patent illegality in the order of the Learned Single Judge dated 01.11.2011 in W.P.No.23719 of 2008 in dismissing the Writ Petition filed by the Appellant/Petitioner. Also, we are not inclined to interfere with the discretion exercised by the Learned Single Judge in reducing the penalty based on the facts and circumstances of the present case to Rs. 5/-. As such the Writ Appeal sans merits.
29. In the result, the Writ Appeal is dismissed, leaving the parties to bear their own costs. Resultantly, the order passed by the Learned Single Judge in W.P.No.23719 of 2008 dated 01.11.2011 is affirmed by this Court for the reasons assigned in this Writ Appeal. Consequently connected Miscellaneous Petition is also dismissed.