SUPREME COURT REPORTS

MISRILAL JAIN ETC. ETC.

v .

STATE OF ORISSA & ANOTHER

May 2, 1977

(1977] 3 S.C.R.

[M. H. BEG, C.J., Y. V. CHANDRACHUD, P. N. BHAGVATI, V. R.

KRISHNA !YER, N.1 L. UNTWALLA, S. MURTAZA FAZAL ALI ANU P. S.

KAILASAM, JJ.}

Orissa 1axation (On goods carried by Roads or Inland Watenvays) Act 8 of 1968-Sections 3 and 27-Constitutlonaf validity of.

The Orissa Taxation (On goods carried by Roads or Inland Waterways) Act 7 of 1959 and the Orissa Taxation (On Goods carried by Road or Inland Waterways) Validation Act 18 of 1962 were struck down by this Court on 10-8~1967 as invalid and it was held that the respondents were not entitled tQ recover any tax from the appellants under the &foresaid Acts.

On March 26, 1968, the Orissa Taxation (On Goods carried by Roads or Inland Waterways) Act 8 of 1968 was passed after obtaining the previoussanction of the President under Art. 304 of the Constitution to the moving of the Bill, imposing the same levy which it had unsuccessfully ait:tempted to levy under D : the Act of 1959 and to validate under the Act of 1962.

By section 1(3) of the 1968 Act, the Act was to be deemed to have come into force on April 27, 1959 being the date on which the Act of 1959 had come into force.

Section 27 ot the Act provides that notwithstanding the expiry of the Act of 1959 <M.ld notwithstanding anything contained in any judgment decree or order of any court, all assessments made, all taxes imposed or realised, any liability incurred or any action taken under the Act of 1959 shall be deemed to have been validly made, imposed, incurred or taken under the corresponding provisions of the Act 1968.

The claims of some of the appellants who had E asked for refund of the tax collected under the Act of 1962 which was held unconstitutiona.1, having been refused by the Government, they filed wTit petitions in the Orissa High Court challenging the validity of the 1968 Act. The Hieb Court dismissed the writ petitions.

In appeal to this <;; curt by special leave, the Court,

HELD : (I) The impugned enactment is a valid exercise of legislative power and is in no sense a fraud on the Constitution.

Since it is well established that the povver to legislate carries with it the power to legislate retrospectively as much as prospectively, the circumstance that an enactment operates entirely in the past and has no prospective life cannot affect the competence of the Legislature; to pass the enactment if it falls with.in the list on which that competence can operate.

As regards the power to pass a validating Act, that power is essentially subsidi:M)' to the legislative competence to pass a law under an appropriate entry of the relevant list. [718 B-E]

Khyerbar! Tea Co. Ltd. v.· State of Assam [1964] 5 S.C.R. 975, applied.

(2) In the instant case, the St:"lte Legislature passed an independent enactmen~ in 1968. after complying with. the l.'Onstitutional requirements, but it gave , l to that enactment retrospective effect from the date. that! the 1959 Act had 1\, come into force and it created a legal fiction which was permissible for it to do, that all attions taken under the Act of '1959 shall be deemed to have been taken under the Act of 1968. [717 F-G]

Jawaharmal v. State of Rajasthan [1966] I SCR 890, not applicable.

(3) If the vice from which an enactment suffers is cured by due compliance with the legal or constitutional requirement, the Legislature has competence to validate the enactment and such validation does not constitute an en- A croachment on the functions of the judiciary. The validity of a validating; taxing law depends upon \vhether. the legislature possesses the competence over the subject-matter of the law; whether in making the validation it has removed the • defect from which the earlier enactment suffered and whether it has made due and adequate provision in the validating law for a va•lid imposition of the tax.

(718 GH]

Prithvi Cotton Mills v. Broach Borough Mu11icipality [1970] 1 SCR 388; S Tirc.th Rani Rajindra Nath v. State of U.P. A.LR. 1973 SC 405 and Govern nient of Andhra Pradesh v. Hindustan Mac/line Tools Ltd. (1975) Supp. SCR 394, referred to.

( 4) Jf any appeal challenging an order of1 assessment is filed beyond the period of lin1itation and the authority is satisfied that the apper.1 could not be filed "Within limitation for the reason that the Acts of 1959 and 1962 were held to be unconstitutional, the delay in filing the appeal can be con~ cloned under the second proviso to section 12 of the Act of 1968. lf any C appeal fifed for challenging the order of <:-ssessment was withdrawn or not pursued for the reason that the t"'O Acts were held unconstitutional, the authority concerned can pass appropriate orders reviving the appeal. [719 D-F]

Observation : It is hoped that Ari.

144A introduced by the 42nd Amendment wiJI engage the prompt attention of the Pz..rliament so that it may, by

so that it may, by general consensus, be so amended as to general consensus, be so amended as to leave to the court itself ]) the duty to decide how large a Bench should decide any particular case.

A court which has large arrears to contend with has now to undertake an unnecessary burden by 7 of its members assembling to decide all sorts of oonsri.tutional questions, no matter what their weight or worth.

Since Art. 13(3) (a) of the Constitution defines "law" to inc[ude any Ordinance, Order, bye-law, rule, regulation, notification etc. having the force of law, seven Judges of this C.Ourt may have to sit for detennining any al)d every question as to the constitutional validity of even orders and

E. notifications issued by the Government, which have the force of l<JJW.

This will inevitably cause great inconvenience and undue delay in disposal of cases. f720' C-Dl CIVIL APPELLATE JURISDICTION : c. A. No. 1810 of 1971.

(Appeal by Special Leave from the Judgment and Order dated 1.3.1971 ef the Orissa High Court in O.J.C. No. 1597 of 1968)

AND Ii' C. A. No. 1170 of 1972

(Appeal by Special Leave from the Judgment and Order dated 8.3.1971 9f the Orissa High Court in 0. J.C. No. 316 of 1970)

AND Civil Appeal No. 1981 of 1972 G SAppeal by Special. Leav~ from the Judgment and Order dated ,:08.3.1971 of the Onssa High Court in 0. J. C. No. 1885 of 1968)

AND Civil Appeal No. 1982 of 1972.

(Appeal by Special ~ve !rom the Judgment and Order dated 28.6.1971 of the Onssa High Court in 0. J. C. No. 153 of 1971)

AND Civil Appeal No. 1603 & 1604 of 1972

(Appeal by Special Leave from the Judgment and Order dated 2.3.1971 of the Orissa High Court in O J C Nos 202 rnd 203 of 1969.) . . . . '

A. K. Se11, Bishamber Lal Khanna and Bishamber L"l for the appellants in CA No: 1810/71.

B A. K.Sen, (CA No. 40/72) H. R. Gokhale (CAs 1603-1604) G?_bmd Das (CAs 1170, 198, 1982, SLPs and for the interveners) B11oy Mohen(>', Mrs. Sunanda Bhandare, M. S. Narsimlwn,

A. K.

Mathur, A. K. Sharma and Miss Malini Poduval for the appellants in CA Nos. 1170, 1981-1982, 1603-1604 of 1972 and CA No. 40172 and in the SLPs Nos. 305-310/72 and for the Interveners.

C G. Rath, Adv. General Orissa and G. S. Chatterjee and R. K. Mehta

for respondents in CAs 1810, 1170, 1981 1982, 1603-1604 and 40)

The Judgment. of the court was delivered by

CHANDRACHUD, J.-In 1959, the Orissa Legislature enacted the Orissa Taxation (on Goods carried by Roads or Inland Waterways) Act, 7 of 1959,_ the constitutionality of which was challenged by the appellants on the ground that the Bill leading to the Act was moved without the previous sanction of the President of India, as required by the proviso to Art. 304 of the Constitution. During the pendency of the writ petitions filed by the appellants in the Orissa High Court, the Orissa Legislature passed the Orissa Taxation (on Goods carrieu by Roads or Inland Waterways) Validation Act, 18 of 1962, validating the Act of 1959.

The High Court accepted the appellants' contention that the Act of 1959 was unconstitutional but it dismissed the Writ petitions on the ground that the appellants were not entitled to any relief as they had not challenged the Act of 1962 which had validated the Act of 1959.

After the decision of the High Court, respondent No. 2, the Tax Officer, assessed tax in varying amounts for different quarters on the goods carried by the appellants by road.

The appellants then filed fresh writ petitions under Art. 226 of the Constitution challenging the Act of 1962.

Those petitions were dismissed by the High Court but in appeal, the judgment of the High Court was set aside by this Court On August 10, 1967.

It was held by this Court that the Validating Act of 1962 did not cure the defect from which the Act of 1959 suffered and therefore, respondents were not entitled to recover any tax from the appellants under the aforesaid Acts.

On March 25, 1968 the Orissa Legislature, having obtained the previous sanction of the President to the moving of the Bill, passed the Orissa Taxation (on_ Goods carried by Roads or Inland Waterways) Act, 8 of 1968, imposing the same levy which it had unsuccessfully attempted to levy under th~ Act of 1959 and to validate under the Act of 1962.

Some of the appellants from whom the State Government had recovered taxes after the Act of 1962 was upheld by the High Court asked for refund thereof after tht Act was declared unconstitutional by this Court.

The refund havmg been refused by the Governments, the appellants filed writ petitions in the High Court

' '

challenging the validity of the 1968 Act.

The dismissal of those writ petitions has given rise to these appeals by special leave.

There is no substance in any of the contentions raised on behalf of the appellants regarding the constitutionality of the Act of 1 %8.

The bill which matured into the impugned Act was introduced by the Orrrisa Legislature after. obtaining the previous sanction of the President under the Proviso to Art. 304 of the Coustituti(jn. As shown by the Preamble, the Act was passed in order to provide for the lev)1 of tax on certain goods carried by roads or inland waterways in the State of Orissa and to validate certain taxes imposed on such goods.

By s. ) ( 3), the Act was to be deemed to have come into force on Aprll 27, 1959 being the date on which the Act of 1959 had come into force.

Section 3 of the Act which contains the charging provision provides that there shall be levied a tax on goods of the descriptio11 mentioned in the section and carried by means specified therein.

Section 27 of the Act provides in so far as material that notwithstanding the expiry of the Act of 1959 and notwithstanding anything contained in any judgment, decree or order of any Court, all assessments made; all taxes imposed or realised, any liability incurred or any action taken under the Act of 1959 shall be deemed to have been validly mad~, imposed, realised, incurred or taken under the corresponding provisions of the Act of 1968.

These provisions of the Act of 1968 show that what the State Legislature did thereby was to enact, with retrospective effect, a fresh piece of taxing statute after complying with the constitutional mandate contained in the proviso to Art. 304 that no Bill tor the purposes of clause (b) of the Article sha 11 be introduced or moved in the Legislature of a State without the previous sanction of the President. ·

The reliance of the appellants on the judgment of this Court in Jawaharmal v. State of Rajasthan (') is wholly misconceived.

In that case, s. 4 of the impugned Act of 1964 in truth and substance provided that the failure to comply with the constitutiona I mandate of Presidential sanction shall not invalidate the Finance Acts of 1961 and

1962. It wa1s held by this Court that it was not competent to the legislature to pass an Act providing that an earlier Act shal] be deemed to be valid even though it did not comp:y with the requirements of the Constitution.

In the instant case, the State Legislature passed an independent enactment in 1968 after complying with the constitutional requirement but it gave to that enactment retrospetive effect from the date that the 1959 Act had come into force and it created a legal fiction, which was permissible for it to do, that all actions taken under the Act of 1959 shall be deemed to have been taken under the Act ot 1968.

Mr. Gobind Das, appearing on behalf of some of the apocllants rnised P?int~ commonly associated with high constitutional concepts',

but lackmg m substance.

He urged that the Act of 1968 is a piece -of co'.ourable legislation, that it constitutes a flagrant encroachment on

(I) [1966] l S.C.R. 890

the functions of the judiciary and that since the Act has no operation in futuro and operates only on the dead past, it is void as lacking in legislative competence.

Leame~ counsel also employed the not unfamiliar phrase that the Act is a fraud on the Constitution.

Happily all of these attacks, in so far as they at all require an .answer, -can be n:iet effectively in a brief compass.

In Khyerbari Tea Co. Ltd. v.

State of Assam('), it was held by this Court that Art. 304(b) of the Constitution does not require that Jaws passed under it must always be prospective.

Nor was it correct to say that once the State Legislature passes an Act without recourse lo that Article and that Act is struck down, the Legislature cannot re-enact, that Act under that article and give it retrospective effect.

The Court further held in Khyerbari (supra) that the mere fact that a validating taking statute has retrospective operation does not change the character of the tax nor can it justify the Act being branded as a colourable piece of legislation in any sense.

We may only add that since it is well-settled that the power to legislate carries with it .the power to legislate retrospectively as much as prospectively, the circumstance that an enactment operates entirely in the past and has no prospective .Jife cannot effect the competence of the legislature to pass the enactment, if it falls within the list on which that competence can operate.

As regards the power to pass a validating Act, that power is essentially subsidiary to the legislative competence to pass a law under an appropriate entry of the relevant list.

Thus the impugned enactment is a valid exercise of legislative power and is in no sense a fraud on the Constitution.

As regards the alleged encroachment by the legislature on fields judicial, the argument overlooks that the Act of 1968 does not, like the Act under consideration in Jawaharmal( 2 ), declare that an invalid Act shall be deemed to be valid. It cures the constitutional vice from which the Act of 1959 suffered by obtaining the requisite sanction of -the President and thus armed, it imposes a new tax, though with retrospective effect. Imposition of taxes or validation of action ta1<en

under void laws is not the function of the judiciary and therefore, by taking these steps the legislature cannot be accused of trespassing on the preserve of the judiciary.

Courts have to be vigilant to ensure that the nice balance of power so thoughtfully conceived by our Constitution is not allowed to be upset but the concern for safeguarding the judicial power does not justify conjuring up trespasses for invalidating laws.

There is a large volume of authority showing that if the vice from which an enactment suffers is cured by due compliance with the legal or constitutional requirements, the legislature has the competence to validate the enactment and such validati<Jn does not constitute an encroachment on the functions of the judiciary. The validity of a validating taxing law depends upon whether the legislature possesses the competence over the subject-matter of the law, whetl1er in making the validation it has removed the defect from which the earlier i; nactment suffered and whether it has made due and adequate provision in the validating .Jaw for a valid imposition of tlie tax. ( See, for example Prithvi Cotton Mills v._ Broach Borough Municipality('!;

(1)

[19641 5 S.C.R. 975 (3)

(2) [196611 S.C.R. 890-

Tira th Ram Rajindra Nath v. State of U.P. ('); Government of Andhra Pradesh v. Hindustan Machine Tools Ltd.('). The passage from Cooley's Constitutional Limitations' (Ed. 1927, Vol. I, p. 183) that a legislative act is a "pre--Oetermination of what the law shall be for the regulation of all future cases falling under its provisions" does not bear upon the power of the legislature to pass laws which are exclusively retrospective. Mr. Gobind Das's reliance on that passage cannot therefore further his contention.

Mr. Gokhalc, who appears on. behalf of some of the appellant~, attempted to challenge the Act of 1968 on the ground of unreasonableness but he did not pursue that argument.

But he made another point which requires some attention.

The appellants, or some of them, did not challenge the orders of assessment passed against them as the Acts of 1959 and 1962 were held unconstitutional.

Counsel's apprehension is that any appeal filed hereafter for'thallenging the assessment made under the earLer Acts would be barred by litnltation and the appellants would be deprived of their statutory right to question the correctness of the assessment.

This apprehension is unfounded because the 2nd proviso to s. 12 of the Act of 1968 empowers the appro- . priate authority to admit an appeal after the period of limitation is over if it is satisfied that the dealer had sufficient cause for not preferring the appeal within the said period. Sub-section (3) confers on the Commissioner the power of revision and sub-section ( 4) of s. 12 confers the power of review subject to the rules made under the Act.

We have no doubt that if any appeal challenging an order of assessment is filed beyond the period of limitation and the authority is satisfied that the appeal could not be filed within limitation for the reason that the Acts of 1959 and 1962 were held to be unconstitutional, the delay in filing the appeal would be condoned.

We are eqnally confident that if any appeal filed for challenging an order of assessment was withdrawn or not pursued for the reason that the two Acts were held nnconstitutional, the authority concerned would pass appropriate orders reviving the appeal.

We are happy to note the assurance of the learned Advocate-General of the State of Orissa that the State wiU not oopose in such cases the condonation of delay or the revival of appeals. For these reasons we dismiss the appeals but there will be no order as to costs.

The Special Leave Petitions which were kept pending to await the decision of these appeals are hereby dismissed.

We may take this opportunity to dwell njlon the inconvenience G resulting from the enactment of art. 144A which was introduced by the 42nd Amendment to the Constitntion.

That article reads thus :

" "Special provisions as to disposal of questions relating to Constitutional validity of laws.

(I), A.I.R. (1973) S.C. 405.

(2) (!975] S•ipp S.C.R. 394.

"144A (1) The minimum number of Judges of the Supreme Court who shall sit for the purpose of determining any question as to the Constitutional validity of auy central law or State law shall be seven.

(2) A Central law or a State law shall not be declared to be coustitiltionally invalid by the Supreme Court unless. a majority of not less than two-thirds of the Judges sitting for the purposes of determining the question as to the constitutional validity of such law hold it to be constitutionally invalid." "

The points raised in these appeals undoubtedly involve the determination of questions as to the constitutional validity of a State law but they are so utterly devoid of substance that Mr. Asoke Sen and Mr.

Gokhale who appear for the appellants could say nothing in support of their contentions beyond barely stating them. Were it not for the valiant, though vain, attempt of Mr. Gobind Das to pursue his points, the appeals would have taken lesser time to dispose of than for a Court of seven to assemble.

Article 13(3) (a) of the Constitution defines "hw" to include any Ordinance, Order, bye-law, rule, regulation, notification etc. having the force of law with the result that seven D judges of this Court may have to sit for determining any and every question is to. the constitutional validity of even orders and notifications issued by the Government, which have the force of Jaw.

A Court which has large arrears to contend with has now to undertake an unnecessary burden by seven of its members assembling to decide all sorts of constitutional questions, no matter what their weight or worth. It is hoped that Art. 144A will engage he prompt attention E of the Parliament so that it may, be general consensus, be so amended as to leave to the Court itself the duty to decide how large a Bench should decide any particular case.

S.R.

Appeals dismissed.

MISRILAL JAIN ETC. ETC

STATE OF ORISSA & ANOTHER

M. H. BEG, C.J.

Y. V. CHANDRACHUD

S. MURTAZA FAZAL ALI

KAILASAM, JJ.

Sections 3 and 27

10-8~1967 as

March 26, 1968

Art. 304

section 1(3)

Section 27

Orissa High Court

[1964] 5 S.C.R. 975

[1970] 1 SCR 388

section 12

Art. 13(3)

A. K. Se11

Bishamber Lal Khanna

Bishamber L"l

B A. K.Sen

H. R. Gokhale

B11oy Mohen

Sunanda Bhandare

M. S. Narsimlwn

A. K.

Mathur

A. K. Sharma

Malini Poduval

C G. Rath

G. S. Chatterjee

R. K. Mehta

CHANDRACHUD

Orissa Legislature

Art. 304

Orissa Legislature

Art. 226

August 10, 1967

March 25, 1968

Art. 304

Orissa

Aprll 27, 1959

Section 3

Section 27

Art. 304

s. 4

Gobind Das

Art. 304(b)

Khyerbari

Jawaharmal

Gokhalc

s. 12

s. 12

State of Orissa

art. 144A

Supreme Court

Asoke Sen

Gokhale

Article 13(3)

Art. 144A

Parliament


t .

!TZI

CONTROLLER OF ESTATE DUTY MADRAS

ALLADI KUPPUSWAMY

May 3, 1977

[P, N, BHAGWATI, N, L. UNTWALIA ANIJ S. MURTAZA FAZAL ALI, JJ.I

£.state Duty Act, 1953-Sections 7(1) and (2) and 39-Scope of.

Hindu Joint Fan1ily-Death of coparcener-Nature of interest of widow--Widow not claiminK partition during the life time-Death of widow--

Whether interc5t in joint fan1ily prop:erty passes-Liability to estate dutyfatate Duty Act, 1953, SS,, 5, 6, 7(1), 39, 40(a) and (b)-Hindu Women's

Siglu.1 tc I'roperty Act, 1937, Section 3(2).

Construction of fiscal statutes-Duty of the court-Legislative intent reflected in the Acts must be given full effect to.

Sbri Anadi wa~ a member of the Hindu coparcenary consisting of hl1nself, his wife (Smt. Alladi) and three sons.

Shri Alladi who died before the Estate Duty Act 1953 came into force, during his life time had settled certain properties absolutely on his wife and had also declared certain other properties to form part of the joint family properties. Smt. Alladi died on January 5, 1956, a fev.' months before the passing of the Hindu Sucession Act, 1956.

The Assistant Controller of Estate Duty valued her estate at a total amount of Rs. 7,25,527 /- including a sum of Rs. 2,02,271 /- being the value of her I/4th share in the joint family properties, on the footing that as Smt. AUadi was a member of the Hindu coparcenary, her interest in the joint family properties passed on her death to the other three sons and the value of this interest being l I 4th, the heirs would be liable to pay estate duty on the value of the I /4th. share.

The respondent filed an appeal before the Central Board of Revenue OJ.nd <..:ontended that as Smt. Allacli died as a Hindu widow she possessed no coparcenary interest which could pass on her death; her interest merged without any benefit accruing or arising to the coparceners and hence section 7 subsection ( 1) had no application. This plea did not find favour with the Board which upheld the order of the Assistant Controller of Estate Duty as correct.

The Board further held that the Hindu widow's estate created by s. 3(2) of the ffindu WidO\VS Rights to Property Act, 1937, wa-s an interest in property-- which cef<sed on the death of the widow attracting estate duty. Thereupon, the respondent moved the Board to make reference to he High Court of Madras for decision of the questions of law involved in the case.

The Board referred three questions to the High Court under section 64(1) of the Act, but at thei time of the hearing of the reference, the respondent confined his arguments only to the following issue, namely "Whether on the facts and in the circurristances of the case 1/ 4th share of the deceased in the joint family properties to which she was entitled under s. 3 of the Hindu Womens Rights to Property Act, 1937, was correctly included in her estate as property deemed to pass on her death under s. 7 of the Estate Duty Act, 1953." The High Court relying on the decisions of the Privy Council in Attorney General of Cey/011 v. Arunachalani Chettiar (1957) AC 513 and Gartside v. Inland Revenue Comn1issio11ers 1968 AC 553 held that the interest of Smt. A11adi was not a coparcenary interest which could have passed under s. 7(1) of the Act and as the said interest was incapable of .valuation, it was not exigible to estate duty and thus held against the Revenue and in favour of the .accountable person.

Allowing the appeal by certificate, the Court,

HELD: (I) By virtue of the provisions of the Act of 1937 aHindu widow undoubtedly p-05sess a coparcenary jnterest as contemplated by s, 7 (I l of the Act and she is also a member of the Hindu coparenary as envisad by ,, 7 (2) of the Act f734 Bl

(2) Prior to the passing of the Act of 1937 a Hindu Woman had no right A t>r interest at all in a Hindu coparcenary. The Act of 1937 bettered the rights of a Hindu widow and conferred on her by s. 3 th;: same interest as possessed hy her husband. [727 A]

(3) The words "the same interest as he himself had" in sub-section (2) of s. 3 of the Act of 1937 clearly indicate that the statute gave effect to the well-settled doctrine of Hindu shastric law that the persona of the husband after his death continues through his wife who is a surviving half and the B husband continues to live through the widow so long as the widow is alive.

When the Legislature used the expression "the same interest as he himself had",

it would include all the rights possessed by the husband which could devolve Qn the wife. Thus, a Hindu widow was introduced for the first time into the Hindu coparcenary having the same rights as her husband and became as it were a member of the Hindu coparcenary with two qualifications, namely, (i) she had only a limited interest and (ii) that she could not be a coparcener because having regard to the nature of her entry into the family after marriage with her husband, there was no question of her getting interest in the Hindu C coparcenary bv birth which is one of the most important incidents of a Hindu <:Oparcenary. [727 D-EJ

( 4) The essence of coparcenary property is the unity of ownership which is vested in the whole bcxly of coparceners and the two principal incidents of coparcenary are that the interest of coparceners devolve by survivorship and not by inheritance and that the male issue of a_ coparcenary acquires an interest in the coparcenary property by birth and not as representing his father. [729 D-El D

(5) A Hindu coparcenary has six essential characteristics, namely, (i) that the lineal male descendants upto the third generation acquire an independent right of ownership by birth and not as representing their ancestors; (ii) that the members of the coparcenary have the right to work out their rights by demanding partition; (iii) that until partition, each membe:r; has got ownership extending over the entire property jointly with the rest and so long as no parti

tion takes p1ace it is difficu1t for any coparcener to predicate the share which he might receive; (iv) that as a result of such co-ownership the possession and E enjoyment of the property is common; (v) that there can be no alienation of the propertv without the concurrence of the other coparceners unless it be for legal necessity and (vi) that the interest of a deceased member lapses on his death and merges in the coparcenary property.

Applying these tests to the interest of a Hindu widow who has been introduced into a cooarcenarv by virtue of the Act of 1937, it will be seen, that short of the first condition she possesses all the necessary indicia of a cooarcenary interest.

The fact that before the Act of 1956 she had the characteristic of a widow estate in her interest in the prooerty does not detract any the less from this -position. There F fore, though a Hindu widow cannot be a copa"rcener she has cooarcenary interest and is also a member of the conarcenarv bv virtue of the rights con ferred on her under the Act of 1937.

[731 F-H, 732 A-B-D)

State Bank of India v. Ghan1andi Ram (dead) through Shri G1irbax Rai [1969] 3 SCR 681- 686. applied.

(6) If the widow has not chosen to exercise her right of partition, there is no severence of the Hindu coparcenary and on her death the interest of the widow merges in the coparcenary property or lapse.s to the other co. parceners.

Parappagari Parappa alias Han1nuutthappa and Anr. v. Parappagari Naganzan and Ors. ILR 1954 Madras 183; S. T. Sabujpari and Anr. v. SatruRhan lsser and

Ors. AIR 1958 Patna 405, 410 and Mst. Khatrani Kuer v .. S1nt. Tapeslnvari Kuer AIR 1964 Pat. 261, approved.

(7) It was not the intent of the legislature which was fully aware of the statutory interest conferred on a H:ndu widow bv virtue of the Act of 1937 and the incidents thereof that though a Hindu widow has got the same interest as her husband in the Hindu coparcenary and has also the right to demand

!!!

.. • •

OONTROLLER ESTATE DUTY v. ALLADI KUPPUSWAMY (Fazill Ali, J.) 7 23

partition and her interest is a fluctuating one would lapse to the other coparceners in case of her death without seeking partition in the same manner as that of other coparceners, yet it should be exempt from estate duty. In the instant case, Smt. Alladi was a member of the Hindu coparcenary, her interest was undoubtedly a coparcenary interest which lapsed on her death ap.d merged into the coparcenary, It was clearly capable of valuation, it being covered by s. 39 of the Act. Th;: High Court was in error in basin2 its decision on the Arunachalam Chettiar's case and also in Gartside's case ignoring the :decisions of this Court and also the peculiar and special provisions of tho Act. [732 F, 733 A-C]

Attorney-General of Ceylon v. Arunchalam Chettiar (1957)

AC 513= 34 ITR (E.D.) 20 and Gartside v. Inland Revenue Commissioners (1968) AC 553=70 ITR 663 (H.L.) held inapplicable.

(8) It is wrong to contend that the widow could not be treated either a•

a member of the Hindu coparcenary or as having been conferred coparcenary interest in the property. Even though the wido\v is not coparcener in the C itrictly legal sense of the term, the interest which she has is the same interest as her husband and that is the coparcenary interest with the only limitation placed on her bys. 3(3) of the Act of 1937, namely, that her interest would be limited interest, of a Hindu widow. In the instant case, Smt. Alla di possieiied a coparcenary interest which lapsed on her death and merged into the coparcenary and was clearly covered by the inclusive part of sub-s. (1) of s. 7 and under s. 39, the value of the benefit accruing or arising from the cesier of the coparcenary interest was to be determined by taking the principal value of the share and the joint family property which would have been allotted D tQ -~ had there been partition immediately before her death. The present

cse squarely falls within the ambit of s. 7(1) latter part and sub-s. (2) of s. 7 of the Act which attracts s. 39. By reason of the inclusive part of su_b-s. (1) of s. 7 it must be taken to have passed on her death and was hence exigib!e to estate duty. [733 D-G] ·

(9) When the phraseology of a particular section of the statute takes within itS sweep the transaction which is taxable, it is not for the court to strain and stteiS the language of the section so as to enable the tax-payer to escape the tax.

The .legislative intent reflected in the Act of 1937 and Estate Duty Act, 1953, must be given full effect to. [733 H, 734 Al

ClvIL APPELLATE JURISDICTION : Civil Appeal No. 2003/71

(From the Judgment and Order dated 5-12-1969 of the Madras High Court in Tax-Case No. 40 of 1965)

S. T. Desai, P. L. Juneja and R. N. Sachthey, for the appellant.

G. Ve11katarama Sastry, K. R. Ramamani and J. Ramiimurthi for the respondent.

The Judgment of the Court was delivered by

FA7-AL Au, J.-This appeal by certificate is directed against a Full Bench judgment of the Madras High Court dated December 5 1969- Alladi Kuppuswami v. Controller of Estate Duty, Madra~(')-by which the reference made to the High Court by the Central Board of Revenue was answered in favour of the accountable person and against the Revenue.

The case involves an interesting and important question of law in respect of ambit and scope of ss. 7(1) & (2) as also 39 of the

(I) 76 !. T. R. 500

7-707SCI/77

A .Estnte Duty Act, 1953-hereinafter referred to as 'the Act'.

I In order • to decide the question of law arising in the appeal, it may be necessary to set out briefly the facts of the case.

Sri Alladi Krishnaswami Iyer died some time before the passing of the Estate Duty Act, 1953, but ' during his life time he had settled certain properties absolutely on hfa I wife smt. Alladi Venkatakshmamma-to be referred in short as 'Sm!. • Alladi'-and be had also declared certain other properties to from part B of the joint family properties.

Sri Alladi Krishnaswami Iyer-hereafter to be referred to as "Sbri Alladi" was a member of the Hindu coparcenary consisting of himself, his wife and three sons.

In the instant case we are only concerned with the joint family properties left by Shri Alladi.

Smt. Alladi died on January 5, 1956 a few months before the passing of the Hindu Succession Act,. 1956 and the Assisc tant Controller of Estate Duty valued her estate at a total amount of Rs. 7,25,527 including a sum of Rs. 2,02,271 being the value of her • Hh share in the joint family pr(\]lerties. The dispute in the present case centres round the inclusion of the aforesaid sum of Rs. 2.02,2711-. 'Ibe Revenue assessed the estate duty on the footing that as Smt.

Alladi was a member of the Hindu coparcenary her interest in the joint famil) properties passed on her death to the other three sons and the '1alue of this interest being ! 14th the heirs would be liable to pay estate D duty on the value of the !/4th share assessed at Rs. 2,02,271/-. Tile accountable persons raised several contentions before the Revenue ineluding the question as to whether or not the Act would apply to agricultural lands as also whether interest on certain fixed deposits in Government securities would be assessable under the Act.

It appears, however, that before the High Court the respondent pressed only the

E question relating to the inclusion of the value of 1I4th share of Smt.

Alladi valued at Rs. 2,02,2711-. The respondent filed an appeal before the Board and contended that as Smt. Alladi died as a Hindu widow .. she possessed no coparcenary interest which could pass on her death : her interest merged without any benefit accruing or arising to the coparceners and hence s. 1 sub-s. (1) had no aoplication.

The plea taken by the respondent did not find favour with the Central Board

F of Revenue which upheld the order of the Assistant Controller of Estate Duty.

Thereupon the re;-pondent moved the Board of Revenue to make a ieference to the High Court of Madras for decision of the questions of Jaw involved in the case.

The Board accordingly referred the following questions to the High Court :

G "1. Whether on the facts and in the circumstances of the case one-foh share of the deceased in the joint family • propertis, to which she was entitled under section 3 of the Hindu Women's Rihts to Property Act, 1937, was correctly tii included in her estate as property deemed to pass on her dtath under section 7 of the &tate Duty Ac~ 1953?

2. Whether the Estate Duty Act, 1953, in so far as it ,

seeks to levy duty on agricultural lands, is ultra vires of the legislative powers of the Union Legislature ? '

'-, ;·.<;

.CONTROLLER ESTATE DUTY v. ALLADI KUPPUSWAMY (Fazal Ali, J.)' 725

 3. Whether, on the facts and in the circumstances of the case, the accrued interest on fixed deposits and Govermuent securities up to the date of death of the deceased was correctly included in her estate under section 34(2) of the Estate Duty Act, 1953 ?

Although three questions had been referred to the High Court by the

Huard, at the hearing of the appeal the respondent gave up questions Nos. 2 and 3 and confined his arguments only to question No. 1 whicb falls for determination in this case.

The High Court, relying mainly on lhe decisions of the Privy Council in Attorney-General of Cey/011

v. Arw1achalam Chettiar;(') and Ganside v. Inland Revenue: Commissioners(') came to the conclusion that the interest of Smt. Alladi wa, not a coparcenary interest which could have passed under s. 7 ( l) of the Act and as the said interest was incapable of valuation wns

nnf exigible to estate duty.

Thereafter the appe:Jant applied to the High Court for granting a certificate of fitness for leave to appeal to this Court and the same having been granted the appeal has now been placed before us for hearing.

The respondent reiterated his contentions before us and submitted that s. 7 ( 1) of the Act had no applicat'on to the facts of the present case, and therefore, the share of Smt. Alladi was not exigible to estate ducy.

The appellant, however, submitted that a Hindu widow had a coparcenary interest in the joint family properties which could be valued on the basis of the factors enumerated in s. 39 of the Act, the High Court was in error in holding that the interest of Smt. Alladi was not capable of any valuation.

The appellant, therefore, submitted that the High Court had not correctly appreciated the legal nature and character of the interest of the Hindu widow conferred on her by virtue of the Hindu Women's Rights to Property Act, 1937.

In our opinion the answer to the problem would naturally lie in a correct interpretation of ss. 7(1) & (2) of the Act as also on a true construction of s. 3 (2) of the Hindu Women's Rights to Property Act, 1937 as amended by Act 11 of 1938. It is true that while this Court has had occasions to interpret the provisions of the Hindu Women's Rights to Property Act, 1937-hereafter referred to as 'the Act of 1937'-on several occasions, yet the exact point which arises in this case has not yet been determined by this Court. In ordeic to understand the implications of the arguments advanced by counsel for the parties before us. it may be necessary to extract the relevant provisions of the Act as also of the Act of 1937. Section 7 sub-ss. (I) &

(2) of the Act run thus :

"7. Interests ceasing on death,-

(!) Subject to the provisions of this section, property in which the deceased or any other person had an interest ceasin!! on the death of the deceased shall be deemed to pass on the deceased's death to the extent to which a benefit accrues H

(1) (1957) A. C. 513-34 I. T. R. (E.D.) 20

{2) (1968) A.C5·53-70 I.T.R. 663 (H. L.)

A or arises by the cesser of such interest, including, in particular, a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara Marumakkattayam or Aliyasantana Jaw. '

(2) If a member of a Hindu coparcenary governed by the Mitakshara school of law dies, then the provisions of B su!Hection ( 1) shall apply with respect to the interest of the deceased in the coparcenary property only :-

(a) if the deceased had completed his eighteenth year at the time of his death, or

(b) where he had not completed his eighteenth year at the time of his death, if his father or other male ascendant in the male line was not a coparcener of the same family at the time of his death."

It would be seen that s. 7 ( 1) consist of two parts-the first part refers to the interest of the deceased which ceases on his death and accord- . iil~ to this part two conditions are necessary before there is a passing of the interest-(!) that there mnst be a cesser of the interest by virtue of the death of the deceased; and (2) that as a result of such cesser a benefit accrues or arises.

The second part of sub-s. ( 1 ) contains an inclusive category which brings within the fold of sub-s. ( 1) a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara. Marumakkattayam or Aliyasantana Jaw.

In the instant case, we are mainly concerned with the Mitakshara Jaw.

We might dispose of a short argument advanced by Mr.

S. T. Desai in support of the appeal on this question.

It was submitted that the words "governed by the Matakshara, Marumakkattayam or A/iyasantana law" clearly show that the coparcenary interest . has been used in a wide sense and cannot be restricted to the strict coparcenary interest known to the M itakshara law alone. In the view which we take in this case, however, it is not at all necessary to go into this point.

The main question for determination is as to whether the interest acquired by a Hindu widow under the Act of 1937 can be said to be a coparcenary interest in the legal sense of the term.

Once a Hindu widow is held to have a coparcenary interest, then there would be no difficulty in treating her as a member of the Hindu coparcenary, in which case her interest could be easily valued according to the relevant provision of s. 39 of the Act which runs thus:

"39. (!) The value of the benefit accruing or arising from the cesser of a coparcenary interest in any joint family property governed by the Mitakshara school of a Hindu law which ceases on the death of a member thereof shall be the principal value of the share in the joint family property which would have been allotted to the deceased had there H been a partition immediately before his death."

In order to understand the content and character of the interest which a Hindu widow gets by virtue of the statutory provisions contained in

CONTROLLER ESTATE DUTY v. ALLADI KUPPUSWAMY (Faziil Ali,!.) 72 7

the Act of 1937 there can be no doubt that prior to the passing of the Act of 1937 a Hindu woman had no right or interest at all in a Hindu coparcenary.

She was neither a coparcener nor a member of the coparcenary nor did she have any interest in it, except the right to get maintenance.

She also had no right to demand partition of the coparcenary property after the death of her husband.

The Act of 1937 introduced broad and important changes by bettering the rights of a Hindu widow and conferring on her the same interest as possessed by her husband.

Sub-sections (2) and (3) of s. 3 of the Act of 1937 run thus :

"(2) When a Hindu governed by any school of Hindu law other than the Dayabhaga school or by customary law dies having at the time of his death an interest in a Hindu joint family property, his widow shall, subject to the provi- C sions of sub-section (3), have in the property the same interest as he himself had." ,

"(3)Any interest devolving on a Hindu widow under the provisions of this section shall be the limited interest known as a Hindu Woman's estate, provided however that she shall have the same right of claiming partition as a male D owner.

The words "the same interest as he himself had" in sub s, (2) of s, 3 of the Act of 1937 clearly indicate that the statute gave effect to the well settled doctrine of Hindu Shastric Law that the persona of the husband after his death continues through his wife who is the surviving half of the husband and the husband continues to live through the widow so long as the widow is alive. It was this concept of the Hindu E Law which was sought to be recognised and given effect to by the Act of 193 7. In these circumstances, therefore, when the Legislature used the expression "the same interest as he himself had" it would include all the bundle of rights possessed by the husband which would devolve on the wife and if there were to be any !imitations on thooc rights they were spelt out by sub-s. (3) itself, namely, that while the Hindu widow would have the same right and interest as her husband, F her interest would only be the limited interest known as a Hindu Woman's estate. Sub-section (2) of s. 3 of the Act of 1937 further conferred on the widow the right to demand partition and on partition she was entitled to get the same share as her husband. Thus the position appears to be that a Hindu widow was introduced for the first time into the Hindu coparcenary having the same rights as her husband and became as it were a member of the Hindu coparcenary with two G qualifications, viz., ( 1) that she had only a limited interest; and (2) that she could not be a coparcener because having regard to the nature of her entry into the family after marriage with her husband there was no question of her getting interest in the Hindu coparcenary by birth which is -me of the most important incidents of a Hindu coparcenary.

All the other rights of a coparcener were duly conferred on her by the Act of 1937. , .

Dwelling on the conten{ and import of the nature of the interest <lf a Hindu widow this Court pointed out in laisri Sahu v. Rajdewan

Dubey & Others(') that on the death of her husband the. properties vested in the widow and she fully represented the estate.

In this connection, this Court made the following observations :

"When a widow succeeds as heir to her husband, the ownership in the properties, both legal and beneficial, vests in her.

She fully represents the estate, the interest of the reversioners therein being only spes succession's. The widow is entitled to the full beneficial enjoyment of the estate and is not accountable to any one. It is true that she cannot alienate the properties unless it be for necessity or for benefit to the estate, but this restriction on her powers is not one imposed for _the benefit of revers_ioners but is an incident of the estate as known to Hindu law."

Similarly in a later case in Potti Lakshmi Perumallu v.

Patti KrisJ, navenamma(2 ) this Court reiterated that a Hindu widow was the surviving half of her husband and so long as she was alive the husband continued to live in her. This Court observed as follows :

''The decisions also recognise that though the widow does not, by virtue of the interest given to her by the new law become a coparcener she being entitled to claim partition of the joint family property is in the same position in which her deceased husband would have been in the matter of exercise of that right.

That is to say, according to these decisions her interest is a fluctuating one and is liable to incre.ase or decrease according as there are accretions to or diminutions of the property. In our opinion these decisions

ly down the law correctJy."

lt may be pertinent to note that in the aforesaid case the Court was wnsidering tb.e nature of the interest which a widow derived by virtue Qf the statutory substitution contained in s.3(2) of the Act of 1937.

It was ;), lsp {lOinted out that like other coparceners of a Hindu copar- lhe W.tcr"!lt of a widow until separated by a partition continud lo 1:icl a fiui; iuating o~ which was liable to increase or decrease with

th~ .dea(}js pr ; idditions in the family.

1\1 $Ptmn lsser v. Smt. Subujpari & others(') this Court pointed .O!ll fP#t lhti intere~ col)ferred on a Hindu widow arose by statutory

:stitutiPn '"1<! t)ie Al; t of 1937 introduced changes which were so

alien w thl.> stmctun: of a Hindu coparcenary. In this connection Cp\lft omerved llS f.olJows :

"Tlu: Act in invting the widow of a member of a coparc.enary with (l)e interest which the member had at the time pf his de11th has int; oduced changes which are alien to the

(1) [1962] 2 S.C.R. 558, 564-565.

(2) [19~5] I S.C.R. 26, 33.

(3) [196711 s.~.R. 7.

CONTROLLER ESTATE DUTY v. ALLADI KUPrUSWAMY (Fa.<al Ali, J.) 729

structure of a coparcenary. The interest of a widow arises not by inheritance nor by survivorship, but by statutory substitution :

• • • *

A Hindu coparcenary under the M itakshara school consisbs of males alone : it includes only those members who acquire by birth or adoption interest in the coparcenary property. The essence of CDparcenary property is unity ot ownership which is vested in the whole body of coparceners.

While it remains joint, no individual member can predicate of the undivided property that he has a definite share therein.

The jnterest of each coparcener is fluctuating, capable of being enlarged by deaths, and liable to be diminished by the birth of sons to coparceners : it is only on partition that the coparcener can claim that he has become entitled to a definite share. The two principal incidents of coparcenary property are : that the interest of coparceners devolves by survivorship and not by inheritance; and that the male issue of a coparcener acquires an interest in the coparcenary property by birth, not as representing his father but in his own independent right acquired by birth."

As pointed out above the essence of coparcenary property is the unity of ownership which is vested in the whole body of coparceners and the two principal incidents of coparcenary property are that the interest

of coparceners devolves by survivorship and not by inheritance and E that the male issue of a coparcener acquires an interest in the coparcenary property by birth and not as representing his father.

After having described the incidents of a Hindu coparcenary, the Court proceeded to observe as follows :

"By the Act (Act of 1937) certain antithetical concepts are sought to be reconciled.

A widow of a coparcener is F invested by the Act with the same interest which her husband had at the time of his death in the property of the coparcenary.

She is thereby introduced into the coparcenary, and between the surviving coparceners of her husband and the widow so introduced, there arises community of interest and unity of possession. But the widow does not on that account become a coparcener : though invested with the same interest G which her husband had in the property she does not acquire the right which her husband could have exercised over .the interest of the other coparceners. Because of statutory substitution of her interest in the coparcenary property in place Qf her husband, the right which the other coparceners had under the Hindu law of the Mitakshara school of taking that interest by the rule of survivorship remains suspended so H long as that estate enures. • • * She has still power to make her interest definite by making a demand for partition, as a male owner may. If the widow

after being introduced into family to which her husband belonged does not seek partition, on the termination of her estate her interest will merge into the coparcenary property .. "

Again this Court did not approve of the assumption made by some Courts that the right vested in the widow was liable to revert to the coparcenary, even where, on demand for partition, it became separated from the coparcenary property, and in this connection this Court observed as follows :

"The assumption that though the right vested in the widow by the Act is a right of property which may on demand for partition become separated from the coparcenary property, it is still liable to revert to the coparcenary on the determination of the widow's estate, does not give full effect to the statutory conferment upon the widow of the same right of claiming partition as a male owner".

Finally this Court approved of certain observarons made by the Madras High Court in Parappagari Parappa alias Hammanthappa and Another v. Parappagari Nagamma and others(') where Subba Rao J., as he then was, made the following observations :

"She could ask for partition and separate possession of her husband's share.

In case she asked for partition, her husband's interest should be worked out having regard to the circumstances obtaining in the family on the date of partition. If she divided herself from the other members of the family during her lifetime, on her demise the succession would be traced to her husband on the basis that the property was his separate property. If there was no severance, it . would devolve by survivorship to the other members of the joint Hindu family : "

It is, therefqre, manifest from the aforesaid decision that if the widow had not chosen to .exercise her right of partition, 'there is no severance of the Hindu coparcenary and on her death the interest of the widow merges in the coparcenary property or lapses to the other coparceners.

As already indicated above, this Court in Satrughan v. Smt. Sabujpari & others (supra) had taken the same view and had confirmed .the u; vision Bench decision of the Patna High Court in Smt. Sabujpari and another v. Satrughan Isser and others(2), where the Patna High Court after considering the entire law on the subject, observed thus :

"After having considered the various authorities and the various aspects of the case, my conclusions are that, under the Provisions of the Act a widow orf a deceased coparcenef is placed in same p9sition as the deceased coparcener was, for the reason of the fictiol). that half .the body of the deceased husband survived in the widow; that, like her husband; the widow also is entitled to effect severance of the joint status

(I) I.L.R. (1954) Mad. 183.

(2) A.T.R. 1958 Pat. 405, 410.

:CIJJif'FRoLLER ESTATE DUTY v. ALLADI KUPPUSWAMY (Fazal Ali, J.) 731

of the family by an nneqnivocal expression of intention to separate; * * • * that in case the widow does not exercise her right of partition and dies without expressing any intention to separate, the interest of the husband, which she enjoyed, goes by survivorship to the other members of the joint family."

We find ourselves in complete agreement with the observations made by the Patna High Court to which one of ns (Untwalia, J., as he then was) was a party. The view taken by the Patna High Court in the aforesaid case was later on approved by a Fnll Bench of the Patna High Court in Mst. Khatrani Kuer v. Smt. Tapeshwari Kuer(').

' In State Bank of India v. Ghamandi Ram (dead) through Shri

Gurbux Rai(2 ), this Court, while dealing with the incidents of Hindu C coparcenary, observed as follows :

"According to the Mitakshara School of Hindu Law all the property of a Hindu joint family is held in collective ownership by all the coparceners in a quasi-corporate capacity. * • * The incidents of coparcenership under the Mitakshara law are : first, the lineal D male descendants of a person np to the third generation, acquire on birth ownership in the ancestral properties is common; secondly, that no alienation of the property any time work ant their rights by asking for partition; thirdly, that till partition each member has got ownership extending over the entire property, conjointly with the rest; fourthly, that as a result of snch co-ownership the possession and E enjoyment of the properties is common; fifthly, that no alienation of the property is possible unless it be for necessity, without the concurrence of the coparceners, and sixthly, that the interest of a deceased member lapses on his death to the

snrvivon;. A coparcenary under the Mitakshara School is a creature of law and cannot arise by act of parties except in

o far that on adoption the adopted son becomes a copar- F cener with his adoptive father as regards the ancestral pr°" perties of the latter."

Thus analysing the ratio of a aforesaid case regarding the incidents of a .. Hindu coparcenary it would appear that a Hindu coparcenary has s~ -eiisential characteristics, namely, (1) that the lineal male descendant& np to the third generation acquire an independent right of owner- G ship by birth and not as representing their ancestors; (2) that the members of the coparcenary have the right to work ont their rights l!Y demanding partition; (3) that until partition, each member has gO, t ownership extending over the entire property conjointly with the res( and so long as no partition takes place, it is difficult for any coperce.iit . to predicate the share which he might receive; ( 4) that as a

r.es\ilt of snch co-ownership the possession and enjoyment of the property H

i~ c.on'unon; (5) that there can be no alienation of the property without .....!..·, ' '

<: i) (1). AI.R. 1964 Pat 261.

: '(2} .. (1969] 3 S.C.R. 681, 686.

732 SUPREME COURT REPQltfS (1977] 3 S.<;.ll..

the concurrence of the other coparceners unless it be for legal necessity; and (6) that the interest of a deceased member lapses on his death and merges in the coparcenary property.

Applying these tests to the interest of a Hindu widow who has been introduced into a coparcenary by virtue of the Act of 1937, we find that, excepting condition No. ( 1), all other conditions are fully satisfied in case of a Hindu widow succeeding to the interest of her husband in a Hindu coparcenary. In other words, after her husband's death the Hindu widow under the Act of 1937 has got the right to demand partition, she cannot predicate the exact share which she might receive until partition iJS made, her dominion extends to the entire property conjointly with the other members of the coparcenary. her possession and enjoyment is common, the property cannot be alienated without concurrence of all the members of the family, except for legal necessity, and like other coparceners she has a fluctuating interest in the property which may be mcreased or decreased by deaths or additions in the family. It is manifest that she cannot fulfil the first condition, because she enters the coparcenary long after she is born and after she is married to her husband and acquires his interest on his death. Thus, short of the first condition, she possesses all the necessary indicia of a coparcenary interest. The fact that before the Act of 1956, she had the characteristic of a widowestate in her interest in the property does not detract any the less from this position. It must follow as a logical corollary that though a Hindu widow cannot be a coparcener, she. has coparc.enary interest and she is

also a member of a coparcenary by virtue of the rights conferred -On her under the Act of 1937.

There is yet another important aspect of the matter which has to be considered. At the time when the Estate Duty Act was passed in 1953, the Legislature was fully aware of the statutory interest conferred on a widow by virtue of the Act of 1937 and the incidents thereof.

In these circumstances it is not reasonable to infer that the Legislature could have intended that though a Hindu widow has got the same interest as her husband in the Hindu coparcenary and has also the right to demand partition and her interest which is a fluctuating one would lapse to the other coparceners in case of her death without seeking partition in the same manner as that of other coparceners, yet it should be exempt from estate duty.

The sheet-anchor of the argument of the respondent was the Prizy Council decision in Arunachalam Chettiar's case (supra). In the firsf place, the facts of that case are clearly distinguishable from the facts of the present case. In that case, the Hindu undivided family consisted of father, son and some female members.

According to the Privy

Counci~, the females were merely entitled to maintenance. The females there could not have any interest in the coparcenary nor could any such argument be advanced because there was no statute similar to the Act of 1937.

Moreover, in the Estate Duty Ordinance which was being construed by the Privy Council there was neither any provision

like the inclusive part of sub-s. ( 1) and sub-s. (2) of s. 7 nor any provision similar to s. 39 of the Act. In these circumstances, we do not see how the Privy Council decision in Arunachalam Chattiar'.< case

CONTROLLER ESTATE DUTY v. ALLAl>I KUPPUSWAMI (Fazal Ali,].) 733

(supra) can be called in aid to support the contention of the respon- A dent. In the instant cooe, once it is held, as it must be, that Smt. Alladi wail a member of the Hindu coparcenary, her interest was undoubtedly a coparcenary interest which lapsed on her death and merged in:o the coparcenary. It was also clearly capable of valuation, unlike the position in Arunachalam Chettiar's case where the Privy Council was construing a provision similar to s. 40 of the Act, which, in our opinion, has no application in the present case, it being covered by s.

B 39 of the Act. A fortiori the same observations apply to the case of Gartside v. Inland Revenue Commissioners (supra). That case has no application here where we are concerned with the concept of a Hinda coparcenary which is totally alien to the estates contemplated under the English Acts.

For these rerusons, therefore, we are clearly of the opinion that the two cases relied upon by the High Court do not appear to be of any assistance in deciding the points at issue in the C present appeal, and the High Court was in error in basing its decision on the aforesaid cases ignoring the decisions of this Court as also the peculiar and special provisions of the Act.

Finally, it was vehemently contended by Mr. Sastri for the respondent that the right of a Hindu widow under the Act of 193 7 was merely a statutory substitution of a new status by her introduction into the D copercenary and she could not be treated either as a coparcener or a member of the copercenary or to possess any kind of coparcenary interest. While we agree that the widow after the introduction in the coparcenary could not be held to have become a coparcener, because one of the essential characteristics of a coparcener, namely, acquisition of interest by birth, is wholly wanting in her case, yet when the Legislature which was fully aware of the status of a Hindu widow under E the Shastric Law chose to improve her statUIS by conferring a new right on her under the Act of 1937, and with this avowed object clothed her with all the rights and concomitants of a coparcener's interest, it is futile to contend that the widow could not be treated either as a member of the Hindu coparcenary or as having been conferred coparcenary interest in the property.

Even though the widow is not a coparcener in the strictly legal sense of the term, the interest which F she has is the same interest as her husband and that is the coparcenary interest with the only limitation p; aced on her by s. 3(3) of the Act of 1937, namely, that her interest would be the limited interest of a Hindu widow. The conclusion is therefore inescapable that Smt. Alladi did possess a coparcenary interest which lapsed on her death and merged into the coparcenary and the case was clearly covered by the inclusive part of sulH;. (I) of s. 7 and under s. 39 the value of the G benefit accruing or arising from the cesser of her coparcenary interest was to be determined by taking the principal value of the share in the joint family property which would have been allotted to her, had there been a partition immediately before her death.

The last plank of the argument of the respondent was that the Estate Duty Act being a fiscal statute should be construed strictly so H as to give every benefit of doubt to the subject.

There can be no quarrel With this proposition but when the phraseology of a particular section of the statute takes within its sweep the transaction which is

taxable, it is not for the Court to strain and stress the language of '!he section so as to enable the tax-payer to escape the tax. In the view that we take in this case, it is manifest that the legislative intent reflected in the Act of 1937 and the Estate Duy Act, 1953, must be given full effect.

Summarising, therefore, the position that emerges is as follows :

By virtue od' the provisions of the Act of 1937 a Hindu widow undoubtedly prn; sesses a coparcenary interest as contemplated by s. 7 ( 1) of the Act and she is also a member of a Hindu copercenary as envisaged by s. 7 (2) of the Act. On the death of Smt. Alladi, therefore, there was clearly a cesser of her interest and her interest merged in the copercenary property and by reason of the inclusive part of sub-s. (I) of s. 7, it must be taken to have passed on her death and was hence cxigible to estate duty. Since Smt. Alladi was a member of the copercenary, this interest of her's which passed on her death was liable to be valued in accordance with the method provided by s. 39 of the Act.

The interpretation of s. 40 of the Act is not free from difficulty, but as the present case squarely falls within the ambit of s. 7 (1) latter part and sub-s. (2) of s. 7 of the Act which attracts s. 39, it is not at all necessary for us to enter into the complex domain of the scope and ampit of s. 40 of the Act in this case.

The result is that the appeal is allowed, the judgment of the Hig!J Court is set asiqe and the question referred to the High Court is answered in the affirmative.

There will be no order as to costs ..

S.R.

Appeal allowed.

TZI

CONTROLLER OF ESTATE DUTY MADRAS

ALLADI KUPPUSWAMY

BHAGWATI

Duty Act, 1953

Sections 7(1)

Section 3(2)

January 5, 1956

Hindu Sucession Act, 1956

AUadi

Central Board of Revenue

Allacli

section 7

s. 3(2)

VS Rights to Property Act, 1937

High Court of Madras

section 64(1)

s. 3

s. 7

Estate Duty Act, 1953

s. 7(1)

s. 3

s. 3

[1969] 3 SCR 681

s. 39

Arunachalam Chettiar

Gartside

Alla di possieiied

s. 7

s. 39

s. 7(1)

s. 7

s. 39

s. 7

Estate Duty Act, 1953

S. T. Desai

P. L. Juneja

R. N. Sachthey

G. Ve11katarama Sastry

K. R. Ramamani

J. Ramiimurthi

FA7-AL Au

ss. 7(1)

Estnte Duty Act, 1953

Alladi Venkatakshmamma

Alladi Krishnaswami Iyer

Hindu Succession Act

s. 1

section 3

Rihts to Property Act, 1937

section 7

Whether the Estate Duty Act, 1953

section 34(2)

Estate Duty Act, 1953

s. 7

s. 7

s. 39

Rights to Property Act, 1937

ss. 7(1)

s. 3

Rights to Property Act, 1937

Rights to Property Act, 1937

Section 7

Aliyasantana Jaw

s. 7

Mitakshara. Marumakkattayam

S. T. Desai

Marumakkattayam

s. 39

s. 3

s. 3

Subujpari

Subujpari & others(') this Court pointed .O!ll fPt lhti intere~ col)ferred on a Hindu widow arose by statutory

:stitutiPn '"1<!

[1962] 2 S.C.R. 558

Madras High Court

Subba Rao

Patna High Court

Untwalia

(1969] 3 S.C.R. 681

At the time when the Estate Duty Act

s. 7

s. 39

Arunachalam Chattiar

s. 40

s. 3(3)

s. 7

s. 39

Estate Duy Act, 1953

s. 7

s. 7

s. 7

s. 39

s. 40

s. 7

s. 7

s. 39

s. 40