TMI Blog1969 (12) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... poration shall pay compensation in the under mentioned circumstances and at the rates indicated below. Such compensation is payable only when the death or an injury is caused by an accident during or as a result of air journey performed as a member of the flying crew in the Corporation's service. (1) Death resulting from air journey on duty Senior Captain (Basic Pay exceeding Rs. 1,250) 45,000 Captain and Senior Flight Navigator (Basic Pay exceeding Rs. 1,050) 40,000 Junior Captain Flight Navigator and Senior Radio Officer in selection grade (Basic Pay not exceeding Rs. 1,050) 35,000 First Officer, Senior Radio Officer and Flight Engineer (Basic Pay not exceeding Rs. 850) 30,000 First Officer, Senior Radio Officer and Flight Engineer (Basic Pay not exceeding Rs. 650) 25,000 Probationary Flight Navigator 25,000 Second Officer, Probationary Flight Engineer and Radio Officer 20,000 Air Hostess and Steward 15,000 Probationary Radio Officer, Probationary Air Hostess and Probationary Steward 10,000. The compensation payable under the said rule was in addition to the compensation which the Corporation had agreed to pay under an agreement described as Pilot Agreement entered into w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads as under : Section 2(15).-" 'Property' includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale and also includes any property converted from one species into another by any method. Explanation 1.-The creation by a person or with his consent of a debt or other right enforceable against him personally or against property which he was or might become competent to dispose of, or to charge or burden for his own benefit, shall be deemed to have been a disposition made by that person, and in relation to such a disposition the expression 'property' shall include the debt or right created. Explanation 2.-The extinguishment at the expense of the deceased of a debt or other right shall be deemed to have been a disposition made by the deceased in favour of the person for whose benefit the debt or right was extinguished, and in relation to such a disposition the expression 'property' shall include the benefit conferred by the extinguishment of the debt or right." Section 5 is the charging section. It imposes estate duty in the case of every person dying after the commenceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion "passes on the death" in the sense in which it had been judicially interpreted in England. We might, therefore, usefully refer to English decisions on the interpretation of section 1 of the U. K. Finance Act, 1894, in order to comprehend the true import of passing of property referred to in section 5 of our Act. As in this case we are mainly concerned with section 6 we may as well turn to section 2 of the U. K. Finance Act, 1894, which is in terms almost identical with those of sections 6 to 17 of the Act. Sections 1 and 2(1)(a), in so far as they correspond to sections 5 and 6, read as under : Section 1: " In the case of every person dying after the commencement of this part of this Act, there shall, save as hereinafter expressly provided, be levied and paid, upon the principal value ascertained as hereinafter provided of all property, real or personal, settled or not settled, which passes on the death of such person a duty, called 'estate duty', at the graduated rates hereinafter mentioned, and the existing duties mentioned in the First Schedule to this Act shall not be levied in respect of property chargeable with such estate duty." Section 2(1): "Property passing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t upon two different kinds or classes of property, property which passes in the natural sense and property which is deemed to pass by virtue of special statutory provision. What sections 6 to 17 provide is that property passing on death is deemed to include certain kinds of property, or, perhaps more accurately certain property in certain situations and is not to be deemed to include certain property in other situations. Section 5 and sections 6 to 17 like sections 1 and 2 of the U.K. Finance Act are, however, not mutually exclusive. That they were mutually exclusive, was indeed the view that was held at one time and it had the high authority of Lord Macnaghten who said in Earl Cowle v. Inland Revenue Commissioners, that "if the case falls within section 1 it cannot also come within section 2. The two sections are mutually exclusive." Lord Halsbury, who too was in that case, also appeared to take the same view as Lord Macnaghten. But in Public Trustee v. Inland Revenue Commissioners, all the law Lords including Viscount Simonds and Lord Radcliffe who took part in that decision, were uniformly critical of the abovementioned dictum of Lord Macnaghten, in Cowley's case. For the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural than it would have had if section 2(1)(a) had not been enacted. In order, therefore, to enable the revenue to bring to charge any property for the purpose of estate duty by taking recourse to section 6, the attempt must also satisfy the test that it was the property of the deceased in the sense in which it is defined in section 2(15). I have already said that the Act does not define the word "property" except by way of an inclusive definition. The restraint appears to be deliberate because the term cannot be precisely defined and any attempt to do so will take up to the realms of metaphysics. However, according to Lord Halsbury in New York Breweries Co. v. Attorney-General, a case referred to by Grover J. (as his Lordship then was) in Murat Singh v. Controller of Estate Duty : " 'Property' is not something necessarily connected with physical possession and capable therefore of being treated by manual delivery ; but if one comes to analyse its meaning, it is manifest that a great many things, choses in action, are in the ordinary sense of the word 'property' and capable of being treated not indeed by physical handling, but by the documents of title and investments recogn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispose of it? Counsel for the revenue argued that compensation was payable to the heirs of the deceased pursuant to a contract of employment between the deceased and his employer, the Indian Airlines Corporation. It was a remuneration to which the deceased was entitled under the terms of his employment; only its payment was conditional upon his death being caused by an accident during or as a result of air journey performed as a member of the flying crew in the service of the Corporation or while travelling on duty in surface transport provided by the Corporation or its nominated agents and was, by its very nature, receivable by his legal heirs. Although no specific rule was pointed out to us it was also stated that the deceased had power of disposition over it in the sense that he could nominate the person or persons by whom the amount was recoverable after his death, and that the deceased had actually nominated his wife for that purpose. Learned counsel, therefore, contended that the right to get compensation as a condition of one's service is as much an interest in property as any other interest which a person may have in incorporeal property, such as choses-in-action, etc. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the provisions of this Act, the Board of Education shall grant to the legal personal representatives of a teacher who has been employed . . . and who dies while in contributory service, . . . a sum not exceeding an amount equal to the amount of the additional allowance which the Board might have granted to him if he had at the date of his death become permanently incapable of serving efficiently as a teacher in contributory service, whichever, is greater." The lady made the required contributions and also fulfilled the other conditions on which the payment of the gratuity to her personal representatives depended. Rowlatt J. held that although the quantum of the gratuity was not ascertainable until death, the gratuity was property passing at the death of the deceased, of which she was competent to dispose, within the meaning of the Finance Act, 1894, and so subject to duty. Miss Quixley's administrate appealed. One of the questions posed before the Court of Appeal was : Is there a right which the lady had in the gratuity within the term "property" ? Lord Hanworth M. R. answered the question thus : " But first of all, if the interest that she had falls within the term 'pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpretation under section 22, sub-section (2)(a), it is clear that this sum that it ultimately received, pound 429 17s. 6d., does fall within the charge imposed by section 1 of the Finance Act, 1894." Lawrence, L.J. put the proposition in these words : " Section 1 of the Finance Act, 1894, imposes estate duty upon all property which passes on the death. In order that the estate duty may be payable under that section the property must have a continuous existence before and after the death, and the possession or enjoyment of the property must pass from one person to another on the death. Section 2 deals with property which does not in fact pass on the death, and enacts that, for the purposes of liability to estate duty, that property shall be deemed to pass. In order that estate duty may be payable in respect of property under that section, it is not necessary that there should have been a continuous existence of that property, nor is it necessary that it should pass from one person to another on the death. It would include property which comes into existence for the first time on the death of a person. Amongst the property which is so deemed to pass under section 2 is 'property o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the services which the deceased was required to render and was a part of the remuneration payable under the Service Rules and the Pilot Agreement and its object was to make some sort of provision for the legal representatives of the deceased employee. He, therefore, had interest in it and had also the right to appoint the person to whom it should be paid on his death. Although no specific rule providing for such appointment has been pointed out the fact that he did nominate his wife as the person to whom the compensation should be paid and the Corporation accepted the nomination, goes to show that his authority to do so was recognized. Learned counsel for the accountable person countered the argument advanced on behalf of the revenue by submitting that the compensation in question is in no way different from death compensation under the workmen's compensation schemes, etc., which are generally not dutiable, the deceased having never paid for them nor having held them as his property at any time. So also are damages paid for death on account of accidents. He said there was a difference between compensation payable on account of damages suffered by the estate of the deceased as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir right to receive compensation was a mere expectancy which was not transferable under section 6(a) of the Transfer of Property Act, 1882, and cited in this connection a judgment of the Privy Council in Ananda Mohan Roy v. Gour Mohan Mullick, and of the Madras High Court in Palapatti Raghudu v. Nallagadda Erraiya. I do not think seetion 6(a) of the Transfer of Property Act has any bearing on the question arising for decision in this case as we are not concerned in any way with the rights of the dependants to transfer or dispose of their right of expectancy in this case. For the purpose of decision of this case what is material is the right of the deceased to dispose of by will or otherwise the compensation which his dependants or legal representatives are entitled to receive. I also do not think much of the distinction which the learned counsel endeavoured to draw between the pecuniary damages for the loss caused to the estate and the pecuniary loss sustained by the members of his family through his death. The distinction may have some relevance and I dare say it does have some relevance when one has to consider the question of damages as was the case in Feay v. Barnwell decide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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