9911796707
TMI Blog1970 (7) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... penses of keeping the said hereditaments and premises in a proper state of repair and properly insured And that the Trustees shall pay the residue of the net rents and profits thereof to the Settlor during the term of his natural life and subject thereto . from and after the death of the settler the trustees or trustee shall stand possessed of the residue of such rents income and profits hereinafter called the trust income upon the trust to pay the same unto the said Vishwakanth Pranjiwan (the deft) during his natural life and it is hereby further agreed and declared that from and after the death of the said Vishwakanth Pranjiwan the Trustees or trustee shall stand possessed of the said trust property to sell the same ..................... and it is hereby agreed and declared that the trustees or trustee of these presents shall hold the money to arise from any such sale after payment of all expenses attending such sale upon trust to divide or distribute the same together with the balance of the unapplied income thereof as if such sale proceeds and income had absolutely belonged to the said Vishwakanth Pranjiwan at the time of his death and he had died intestate in respect, thereof. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or determination and will not be kept waiting until the death of the first taker. There is no reason for applying any different rule to a settlement inter vivos, though it may well be more difficult, in the case of a settlement, to collect the intention necessary to bring the doctrine of acceleration into play. Where it can be brought into play there is, of course, no resulting trust for the settlor." As pointed out in Halsbury's Laws of England (3rd Edn.) Vol. 34 pp. 607-608 para 1062 where the same principle is laid down, the doctrine of acceleration does not, however, apply if the remainder is not a vested remainder but is contingent on an uncertain event. The doctrine of acceleration of subsequent interests by the premature determination of the prior interest is however, based on the express or implied intention of settlor which enables the court to construe the grant of the subsequent interest as intended to take effect on the failure or determination of the prior interest in any manner. If, therefore, the document creating the trust expressly or impliedly indicates a contrary intention, the subsequent interests are not accelerated, but there is a resulting trust o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in equal shares absolutely. It was observed in the judgment of Vaisey, J. (at p.54) that, but for the disclaimer, the funds would, at the death of P, have been divisible in comprising all her descendants or whatever degree (children and remoter issue) who had been in existence at any time between the death of the testis and the death of P. The learned judge state that each such person's interest would be an absolute vested interest, so that the class might include not only persons living at the death of P, but also the legal representatives of person who had predeceased her. The learned judge then pointed out that, at the time when he delivered judgment, the class however consisted only of the three children of P. In regard to the contention that the purely gratuitous act of one of the beneficiaries P, should not operate to deprive and dispossess a number of other beneficiaries, viz., P's grand- children and remoter issue, of the interest which the testatrix had given them by her will, the learned judge stated that it was clear that acceleration might and did sometimes alter the constitution of a class of beneficiaries from it would have been if the gift had not been acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. He, however, went on to observe that he could not help feeling that it might "well be more difficult, in the case of a settlement, to collect the intention necessary to bring the doctrine of acceleration into play." He then went on to hold that the interests of those beneficially entitled after the death of the settlor were not accelerated, because the character of the disposition made by the settlement in that case showed that the settlor's intention was that during his life neither he nor his wife nor his children should have any beneficial interest in the trust fund, and that, therefore, there was a resulting trust in favour of the settlor and the fund must be held to have passed on his death for the purposes of the Finance Act of 1894. The learned judge stated (at p. 468) that, having regard to the terms of the deed of settlement before him. " It would be a large and unwarrantable extension of the doctrine (of acceleration) so to apply it" in the said case. It will thus be seen that though the principle of acceleration was in fact not applied in Flower's case because the settlor had manifested a contrary intention, its applicability to trusts i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome would be exempt from Income Tax under the provisions of Section 4 (3) (I) of the Indian Income Tax Act, 1922. The decision in Kasturbai Walchand Trust's case, [1967]63ITR656(SC) is, therefore, not an authority for holding that the doctrine of acceleration applies to deeds of settlement inter vivos. That decision was followed by a Division Bench of this Court in the case of Commr. of Income Tax v. Trustees of Sir Kikabhai Premchand Trust [1967]65ITR213(Bom) and the same is also, therefore, of no assistance for the purpose of deciding the question before me. The last case referred to by the learned counsel on behalf of the plaintiffs was a decision of the Division Bench of this court in the case of Commissioner of Income Tax v. Lady Ratanbhai Mathuradas 1967-68 ITR 504), but in the judgment in that case the application of the doctrine of acceleration appears to have been assumed and it was stated (at p.510) that the sole question was whether the shares of the beneficiaries under the trust deed were indeterminate and unknown, so as to make the trustees assessable at the maximum rate under the proviso to Section 41 of the Indian Income Tax Act, 1922. 6.The Indian Trusts Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner in which the same comes to an end. The words "and he had died intestate in respect thereof" in that clause do not, in my opinion, disclose a contrary intention so as to negative the applicability of the principle of acceleration, but merely describe the class of beneficiaries amongst whom the trust property is to be distributed. There can also be no doubt that the interest which has been conferred on the said class of beneficiaries is a vested interest within the terms of Section 19 of the Transfer of Property Act, 1882, in so far as the condition upon which is certain to occur, and is not in the nature of an uncertain event so as to make it a contingent interest. Moreover, as observed by Vaisey.J, in the case of 1957 3 All ER 52 cited above (at p.54) the application of the doctrine of acceleration may, and does sometimes, alter the constitution of class of beneficiaries from what it would have been if the gift had not been accelerated. The terms of the relevant clause of the Indenture of Trust in the present case are very similar to the terms of the trust created under the will in the old case of Pestonji v. Khurshedbai, (1905-7 Bom LR 207) in which a bequest was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
