Controller Of Estate Duty, Delhi v. Late Shri A.t. Sahani Through L.a. Sahani, New Delhi

Hardayal Hardy, J.

(1) THIS case raises an interesting but difficult point under the Estate Duty Act,

1953 (hereinafter called the Act ). The facts are not many and are also not in

dispute.

(2) THE deceased A. T. Sahani who was an employee of the Indian Airlines

Corporation died on 11th September, 1963 in an air crash while on duty. Under Rule

159 of the Indian Airlines Corporation (Flying Crew) Services Rules, a member of the

flying crew was entitled to certain compensation at specified rates in the event of his

death or an injury caused by an accident during or as a result of air journey

performed as such in the Corporations service. The rule as it stood at the material

time reads as under :-"the Corporation shall pay compensation in the

undermentioned 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 Corporations

service.

(1) Death resulting from air journey on duty

Rs. Senior Captain (Basic Pay exceeding

Rs. 1,250) . . . . . . 45,000. 00 Captain and Sr. Flight

Navigator

(Basic Pay exceeding Rs. 1,050. 00) . . 40,000. 00

Jr. Captain, Flight Navigator & Sr.

Radio Officer in selection grade

(Basic pay not exceeding Rs. 1,050. 00) 35,000. 00

First Officer, Sr. Radio Officer &

Flight Engineer (Basic pay not exceeding

Rs. 6,50 . . . . . . 30,000

First Officer, Sr. Radio Officer, &

Flight Engineer (Basic pay not

exceeding Rs. 650. 00 ). . . . 25,000

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 with the Corporation on 1st April 1960 according to Rule (iv)

where by it was provided that the Corporation shall pay compensation for the death

of a pilot, a maximum of 36 times his monthly basic pay if such death occurred in

the circumstances mentioned in the above-mentioned Service Rules or while

travelling on duty in surface transport provided by the Corporation or its nominated

agents.

(3) IN accordance with the terms of the aforesaid agreement between the

deceased and his employer, a sum of Rs. 68,300. 00 was received by his widow as

compensation.

(4) THE Assistant Controller of Estate Duty included, infer alia, the said amount of

compensation in the principal value of the estate of the deceased under the head

"movables".

(5) ON appeal by the "accountable person", the Zonal Appellate Controller of

Estate Duty, Delhi held that this was a case where compensation was payable to the

legal heirs only in the event of death of the deceased. There could therefore be no

question of the deceased having any interest in the compensation. He further

observed that the mere right of nomination which the deceased had exercised in this

case, was of no consequence. He accordingly excluded the sum of Rs. 68,300. 00

from the principal value of the estate of the deceased.

(6) THE Revenue appealed against the decision to the Appellate Tribunal which

confirmed the exclusion. The Tribunal held that only the property in which the

deceased had an interest in his life-time would be deemed to be the property over

which he could be said to have a power of disposition. In the case of a

compensation receivable on his death such compensation came into being only by

reason of the death of the deceased. As such it could not be said that the deceased

had any interest in it during his life-time. The Tribunal therefore held that the

property in question was not one over which the deceased had any power of

disposition.

(7) AS the Tribunals order gave rise to a question of law; at the instance of the

controller, the following question was referred under section 64 of the Act, to this

Court for the opinion. Whether on the facts and in the circumstances of the case,

the compensation amounting to Rs 68300. 00 was a property within the meaning of

Section 6 of the Estate Duty Act, 1953the Act does not define the term property

Probationary Flight Navigator, . . 25,000

Second Officer, Probationary Flight

Engineer & Radio Officer . . . . 20,000

Air Hostess and Steward . . . . 15,000

Probationary Radio Officer, Protionary Air

Hostess and Probationary

Steward . . . . . . . . 10,000

except by way of an inclusive definition of the term in section 2 (15) which reads as

under s. 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 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 "properly" shall

include the debt or right created. "explanation 2.-The extinguishments 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 extinguishments of the debt or right.

"section 5 is the charging section. It imposes estate duty in the case of every person

dying after the commencement of the Act upon the principal value of the property

passing on his death. It also determines what properties passing on a death are

liable to charge and at what rates. Section 2 (16) which defines the expression

"property passing on the death" is also an inclusive definition and gives neither the

definition of the word "property" nor does it attempt to lay down what property will

be held under the Act to have passed on the death". S. 2 (16) "property passing on

the death" includes property passing either immediately on the death or after any

interval, either certainly or contingently, and either originally or by way of

substitutive limitation and "on the death" includes at a period ascertainable only by

reference to the death; "section 6 to 17 deal with properties which actually do not

pass according to the provisions of Section 5 but are deemed to pass under a fiction

created by these sections. In this case we are mainly concerned with Section 6

which reads as under :-Property within Disposing Capacity.-- Property which the

deceased was at the time of his death competent to dispose of shall be deemed to

pass on his death. "the question as phrased postulates as if the present case is not

covered by Section 5 and the matter has to be discussed in the light of the artificial

meaning given to the expression "property which passes on the death" in Section 6.

But as I shall presently show that is not the correct way of approaching the

problem. In order to appreciate the precise content of this expression, it is

necessary to understand its true meaning under both these sections. The question

therefore primarily resolves itself into one of interpretation of these two sections.

(8) NOW, as observed by P. N. Bhagwati,. in a bench decision of Gujarat High

Court in Mahindra Ramhhai Palel v. Controller of Estate Duty. , Gujarat (1) the

expression "passes on the death" might have created some difficulty of

interpretation but two generations of judicial decisions have imparted to that

expression as occurring in section 1 of the U. K, Finance Act, 1894, which imposed

for the first time in England the duty called "estate duty". exact shades of meaning

that could not have been originally discerned and our Act being modeled on the

English statute it would be a fair presumption to make that when the legislature

enacted our Act, the legislature used the expression "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 I 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 also identical with those of section 6 to 17 of the Act. Sections I and 2 (l)

(a) in so for 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 persons 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 the death of

the deceased shall be deemed to include the property following, that is to say:- (a)

Property of which the deceased was at "the time of his death competent to dispose;.

. . . . . . . . . . . . . . . . . . . ,. . . . . . .

(9) IT may be mentioned that even the English Act did not give any definition of

this expression but by 1953 when our Act, which as said above, was modeled on

the English statute, came to be enacted, the expression had acquired a precise

content and meaning. The classic meaning of the expression was given by Lord

Parker of Waddington in Attorney Genera! v. Milne (2) when he said "the expression

passing on the death is not further defined, but is evidently used to denote some

actual change in the title or possession of the property as a whole which takes

places at death. For the purpose of this section it is absolutely immaterial to whom

or by virtue of what disposition the property passes. in Nevill v. Commissioners of

Inland Revenue, Viscount Haldane L. C. while dealing with Sections I and 2 of the

Finance Act, used a much simpler phraseology when he observed:-"the scheme of

the Act is" that a new duty called estate duty, is to be levied on the principal value

of the property settled or not settled, which "passes" on death. "passes" may be

taken as meaning "changes hands. " The principle is contained in S.. Sect. 2

combines definitions of such property with the extension of the application of the

principle laid down in S. I to certain cases which are not in reality cases of changing

hands on death at all, but are to such an extent in an analogous position that it has

been deemed proper in these instances to impose a similar tax. These cases are

technically altogether outside S. 1. That section is concerned with all property

changing hands, whether under the previsions of an instrument settling by

conferring successive rights to the same property, or by virtue of the general law

prescribing the succession to property. It is a change of the hands into which the

property comes that is the occasion of the tax, whether the property is settled or

not. "sections 6 to 17 of the Indian Act no doubt mention different kinds of property

which are deemed to pass, but as was observed by Lord Radcliffe in Sanderson and

others, v. Inland Revenue Commissioners (4) with reference to section 1 and 2 of

the U. K. Finance Act, estate duty is net charged by the Act 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.

(10) 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 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 Cowley v. Inland Revenue Commissioner (5) 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

(6) all the law Lords including Viscount Simonds and Lord Radcliffe who took part in

that decision, were uniformly critical of the above-mentioned dictum of Lord

Macnaghten in Cowleys case.

(11) FOR the decision of the present case neither the facts in Cowleys case nor

the controversy about the correctness of Lordmacnaghtens dictum are of much

relevance except that the view regarding mutual exclusiveness of sections I and 2

which had held the field for nearly sixty years, inspite of occasional hesitant doubts

cast on it in some decisions, was finally discarded by the House of Lords in 1960

Appeal Cases 398 and the true impact of Section 2 (1) on Section I was described

by Lord Radcliffe in these words:-"its purpose is to explain and refine upon the

meaning of the words "property. . . . which passes on. . . . death" which section I

had declared to be subject to the charge of duty. Sub-section (1) therefore selects

certain categories of property and, aided by the interpretation section, S. 22, brings

them expressly under the description of property passing on death, indifferent to the

question whether, if it itself had not been part of the original scheme of the Finance

Act, 1894, any one of those categories or any particular form of property falling

within one of the categories would or would not have been treated by the general

words of section 1. I can see no significance one way or the other in. the fact that it

declares its purpose by saying that the categories selected shall be "deemed" to be

included in the "property passing" which is charged by section 1. Such a phrase

gives statutory certainty to what might otherwise be in some aspects uncertain and,

in a few, impossible. Thus sub-section (1) (a) names a category, "property of which

the "deceased was. . . . competent to dispose, which seems plainly to embrace all

property which was within his absolute disposition at his death. "

(12) THE conclusion that emerges from the above discussion is that it is section I

of the English Act which as I have said before, corresponds to section 5 of the

Indian Act and no other section that imposes the charge of estate duty, that the

charge so imposed is imposed upon property that passes on death and on no other

property, and that the effect of section 2 (1) (a) of the English Act which

corresponds to section 6 of the Indian Act is to give to the word "passes" in section

1 (,a) meaning wider and less natural than it would have had if section 2 (1) (a) had

not been enacted.

(13) 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 ).

(14) 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 us to the realms

of metaphysics. However, according to Lord Halsbury in New York Breweries Co. v.

Attorney General (7) page 62, a case referred to by Grover. (as his Lordship then

was) in Mwut Singh v. The Collector of Eshite Duty (8) "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, chosen 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 recongnised by the taw as transferring the title,

the incorporeal right to sue (that is what is strictly comprehended in such phrases),

documents which are capable of being enforced and treated as subjects of property.

"

(15) IT is therefore in this general and comprehensive sense that we have to

consider whether the deceased had any interest in the compensation payable by the

Corporation to his legal heirs on the happening of the event and in the -

circumstances mentioned above.

(16) I now pass on to the other aspect of the case, namely the "passing of the

property on death". We have already seen that both Lord Parker of Waddingion in

Attorney General vs. Milne and Viscount Haldane (2) in Nevill v. Inland Revenue

Commissioners (3) were clearly of (he opinion that the expression "passing on the

death" was evidently used to denote some actual change in the title or possession of

the property as a whole which took place at death or that. there was changing of

hands. In other words there must be some property and that includes interest in

that property over which the deceased had some kind of title which was in his

possession during his life time immediately before his death and which changed

hands on his death. In Adamson and another v. Attorney General (9) Lord Russell of

Killowen adverted to the meaning of the expression "passing on the death" as given

by Lord Parker in these words "further, a phrase of Lord Parker in Attorney General

v. Milne (2) is quoted as showing that the eminent authority took the view that whenever any change of title to property takes place at death property passes

within the meaning of section 1. I cannot so interpret what Lord Parker said. As I

read his statement he means no more than that when property passes there must

be some change in the title to or possession of the property as a whole which takes

place on the death. "

(17) IN whatever way one may look at the meaning of the expression "passing on

the death", so far as section 5 is concerned, it cannot be disputed that before the

property passes the deceased must have had some title to or possession of the

property. The question is whether by enlarging the ambit of that expression in

section 6 the legislature has brought about any such radical change in its meaning.

Is it possible that a person should neither have any title in the property nor should

he be in possession thereof and yet he should be competent to dispose 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 ones

service is as much an interest in property as any other interest which a person may

have in incorporeal property, such as chooses in action etc. The circumstance that the

occasion for the exercise of that right arises after the death of that person and is

also conditional upon death, does not in any way detract from the existence of that

right and the deceaseds interest therein during his life-time. The payment of

compensation is not gratuitous nor does it depend upon the discretion of the

Corporation It is a compulsory payment which the Corporation is bound to make on

the happening of a certain event to the heirs of the deceased. There is thus a direct

nexus between the right of the deceased as an essential condition of his service to

have that compensation paid to his legal representatives and the right of his legal

representatives to receive that payment. This right of the deceased must be

regarded as interest in the property in much the same way as he would have had in

any actionable claim of which the payment was postponed until after his death. In

as much as the deceased had also the right to nominate the person to whom the

payment should be made. be had also the power of disposition over it. In support of

his argument the learned counsel for the Revenue referred us to a decision of the

Court of Appeal in England in Attorney General vs. Quixley (10) The question raised

in that case was whether the estate of Margaret Louise Quixley. a teacher, was

subject to estate duty in respect of a death gratuity payable to her legal

representatives by the Board of Education under the provisions of the Teachers

(Superannuation) Act, 1925. The lady was a school teacher who was ultimately at

the time of her death interested in a sum which was called a death gratuity. She had

been a teacher for some years. By the School Teachers (Superannuation) Act of

1918, a system was established for the profession: with respect to the grant of

Superannuation allowances and gratuities to their legal personal representatives.

Section 6 of the Act however declared that "nothing in this Act shall give any person

an absolute right to any superannuation allowance or gratuity, and, except as in this

Act provided, the decision of the Board on any question which may arise as to, or

which may affect the application of this Act to any person. . . . shall be final. There

was another Act of 1922 which made contributions compulsory. In 1925 there came

another Act, the Teachers (Superannuation) Act. By section 5 (1) it was declared:

"subject to 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.

(18) THE lady made the required contributions and also fulfilled the other

conditions on which the payments of the gratuity to her personal representatives

depended.

(19) ROWLATT. 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.

(20) MISS Quixleys administrate appealed. One of the questions posed before the

Court or Appeal was: Is there a right which the lady had in the gratuity within the

term "property" lord Hansworth M. R. answered the question thus :but first of all,

if the interest that she had falls within the term "property", we can leave outside, for

the monment, the other matters brought into consideration in the argument. Now it

appears to me that from and after the 1925 Act came into operation, whereby it was

laid down that the Board shall make a grant to the legal personal representatives of

a teacher, that interest was not only an interest in an uncertain amount, but was a

right which was within the term "property".

(21) THE next question posed by the learned Master of the Rolls was: Is that right

a piece of property under the section To this right a piece of property under the

section To this his Lordship gave the following answer :"in my view it is, and, being

such it prima-facie comes within the enlarging words in section 2, sub-section 1 (a)

of the Finance Act, 1894. Be it observed that what we have to do is not to take the

ordinary meaning of words, but we have to interpret "shall be deemed. " Therefore,

what might not at once appear to be rightly called "property passing on the death"

is still to be property passing on the death, and as such includes property of which

the deceased was at the time of his death competent to dispose. It was, in my

judgment, property. " And then went on to add:-"counsel was, I think rightly,

compelled to admit that she could dispose of a sum ultimately to be received, or

could dispose of this interest by her will, although he said she could not raise any

money upon it in the sense that there could not be an assignment of it while she

was alive. But it would appear to me that to suggest that the deceased lady had no

power to dispose of the sum by will would be to take away half the merit of the

gratuity upon her deceased. If and when it is received it must be subject to her will

and absolute right to receive some sum is of benefit and of comfort to her, because

she is, by means of that knowledge and that competence to dispose of it, able to

make some provision for those who are the objects, and rightly the objects, of her

disposing power, ]t appears to me, therefore, that in view of the right which this

lady had, she bad this power to dispose of the sum by will and, thus, when one

looks at the Act of 1894, section I, the charging section, and section 2, which I have

referred to as a section which sweeps into the charge under section I property

which is to be deemed for the purpose of section I to be property passing in the

death, and when one looks, at the still wider interpretation under section 22, sub

section 2 (a), it is clear that this sum that is ultimately received, 429 17s. 6d. does

fall within the charge imposed by section 1 of the Finance Act, 1894. "lawrence L..

put the proposition in these words :-"section I 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 of which the deceased was at the time of his death competent to

dispose"-see sub-section l (a) of section 2. The words "competent to dispose" are

further defined by section 22, sub-section 2 (a) which enacts, so far as material for

this case, that a person shall be deemed competent to dispose of property if he has

such an interest therein or such general power as would enable him to dispose of

the properly. and the expression "general power" to dispose of the "property is

further defined in the second part of the same sub-section, and it "includes every

power or authority enabling the donee or other holder thereof to appoint or dispose

of property as he thinks fit, whether exercisable by instrument inter-vivos or by will.

""now the sole question arising in this case is whether the death gratuity payable to

the deceased was property of which the deceased was, at the time of her death,

competent to dispose within the meaning of section 2, sub-section l (a) and section

22, sub-section 2 (a) of the Finance Act, 1894. Counsel for the appellant has

admitted, and I think, rightly admitted, that the deceased was competent to dispose

of this property by will as she might think fit. It seems to me that that admission

carries the contention of the Crown the whole length. "

(22) I have already said that the provisions of sections I and 2 (1) of the U. K.

Finance Act correspond to section 5 and 6 of the Indian Act. In Quixleys case, the

learned judges also referred to section 22 (2) (a) of the Finance Act which reads as

follows:-"a person shall be deemed competent to dispose of property it he has such

an estate or interest therein or such general power as would. if he were sui juris,

enable him to dispose of the property,. . . and the expressiongeneral power"

includes every power or authority enabling the donee or other holder thereof to

appoint or dispose of property as he thinks fit, whether exercisable by instrument

inter-vivos or by will. "

(23) THE provision corresponding to that section in the Indian Act is contained in

section 3 (1) (a) which almost reproduces the language of the English Statute.

(24) IT is true that in the instant case the deceased was not required to make any

contribution for the purpose of earning the compensation as Miss Quixley was

required to make under the Teachers (Superannuation) Act, but the compensation

was payable as a reward 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 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 workmens 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 deaths 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 a result of injuries caused to him and the benefit that

accrued to his legal representatives after his death and was occasioned by it. It was

argued that in one case the deceased had an interest in compensation amount

which be could dispose of during his life time while in the other case he had no such

interest nor had he any right of disposition over it as the benefit itself occurred after

he ceased to be there to see to its disposition.

(25) IN this connection the learned counsel cited a Bench decision of Lahore High

Court in Secretary of State v. Gokal Chand and others (11) where in the context of

sections I and 2 of the Fatel Accidents Act XIII of 1885 which is primarily intended

to give the legal representatives of a person whose death has been caused by the

wrongful act, neglect or default of another person a right to recover compensation

from the latter for the pecuniary loss resulting from the death to the deceaseds

children or other relatives enumerated in the Act or to the estate of the deceased.

Sir Shadi Lal C.. who spoke for the Bench said: "the law contemplates two sorts of

damages: the one is the pecuniary loss to the estate of the deceased resulting from

the accident; the other is the pecuniary loss sustained by the members of his family

through his death. The action for the latter is brought by the legal representatives,

not for the estate, but as trustees for the relatives beneficially entitled; while the

damages for the loss caused to the estate and, when recovered, form part of the

assets of the estate. The loss to estate had accrued during the lifetime of the

deceased and could have been recovered by him"

(26) THE above case was approvingly referred to by a Division Bench of Madras

High Court (Rajamannar C.. and Venka- tarama Ayyer.) in Gobald Motor Service Ltd.

, a company registered under the India Companies Act, by its Managing Directors N.

Veeraswami Chettiar and another V. R. M. K. Velusami and others (12) where the

learned judges also referred to the following "the rights of action in the two case are

quite distinct and independent. Under the Law Reforms (Miscellaneous Provisions)

Act, 1934, the right of action is for the benefit of the deceaseds estate; under the

Fatal Accidents Act the right of action is for the benefit of the deceaseds

dependents. "

(27) LEARNED counsel next argued that so far as the dependents of the deceased

were concerned their 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 Mohun Roy V.

Gour Mohan Mullick (13) and of Madras High Court in Palanatti Raghudu and

another V. Nallagudda Erraiva and another (14) I do not think section 6 (a) T. P.

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 dependents 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 dependents or legal representatives. are entitled to receive.

(28) 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 numbers 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. Bai-nwell (15) decided by Singleton. but it does not seem to have any

relevance for the purpose of deciding whether the compensation payable in the

present case is property which should "be deemed to pass on the death of the

deceased. "

(29) LEARNED counsel lastly contended that a mere power of nomination for which

there does not seem to be any specific provision in the relevant Rules or agreement,

cannot be regarded as a power of disposition. He also doubted whether the power

to nominate comes within the expression "competent to dispose of. In this

connection our attention was invited to a decision of Madras High Court in D.

Molianayelu Mudaliar and another V. Indian Insurance and Banking Corporation Ltd.

Salem and (mother (16) where the effect of nomination under section 39 of the

Insurance Act 1938 with reference to a policy of life insurance was considered. It

was there said :"so far as nomination is concerned there is no appreciable difference

between the English and American law on the one hand, and what obtains in India.

According to the English law the payee or the nominee is nothing more than an

agent to receive the money, which money remains as the property of the assured

and at his disposal during his life time and on his death forms part of the estate.

The result is that the payee or the nominee takes no beneficial interest in it. "

(30) THE above passage however does not contain the full statement of law on the

subject because after referring to a large number of cases, Govinda Menon.

added :"there is an exception to the above rule. I n case of nomination of a wife as

the payee under a policy of life insurance. if the construction placed upon the

declaration is that a trust has been created under the provisions of the Married

Womens Property Act, the beneficiary takes the assured amount free of all the

liabilities of the insured and if it is construed as a mere nomination, the nominee has

no more right than to receive the amount subject to all the liabilities as if the

disposition was by means of a testamentary instrument. "

(31) IT is, however, not necessary to discuss at length the legal effect of

nomination in this case because the nomination of his wife by the deceased was

recognized by the Corporation and the payment of compensation has actually been

made to her without any one else having raised any claim thereto.

(32) ON a close and careful consideration of the whole matter. I am inclined to

take the view that the present case comes within the ratio of the decision of the

Court of Appeal in England in Quixleys case. I would therefore answer the question

in the affirmative. The Controller will also have his costs which are assessed at Rs.

300. 00.