RAMCHANRA SHANKAR RAJGURU Vs. ANANDIBAI MAHADEV PANDIT

JUDGEMENT

(1.) This is an appeal from the decision of the Assistant Judge, Satara. The plaintiff sues for partition and separate possession of her half share of the property in suit. It appears that the original appellant, who is defendant No. 2, and who has died pending the appeal, and whose heirs are now on the record as appellants, had two daughters, one of them being the mother of the plaintiff, and the other being defendant No. 1, and he had also a son who was defendant No. 3. On May 10, 1916, the original appellant passed a deed of gift in favour of his two daughters, the plaintiff's mother and defendant No. 1, and that deed of gift was registered, On the same date the two daughters executed a document by which they stated that the properties had been given to them and a deed of gift executed and then they say:- We have to enjoy this property for our life and our sons and daughters are to do the same for their lives. After that the said estate is to be handed over to the heir of our brother Shankarrao who is your son.

(2.) Then the last paragraph of that document says:- If you or your wife, that is, our mother Saraswatibai do for any reason require the property back we shall hand it over to you without any compensation or without any objection.

(3.) The important question on this appeal is whether that latter document can be looked at in evidence having regard to the fact that it is not registered. But assuming for the moment that the document can be looked at, it seems to me that the transaction is a perfectly plain one. The father executes a deed of gift in favour of his two daughters and they on the same date declare the trusts on which they will hold the property. The last paragraph of the document in effect gives the father, the settlor, a power of revocation at any time. In the trial Court the first issue raised was, whether defendant No. 2 proved that the gift deed was a bogus and fictitious transaction and hence inoperative, and the learned trial Judge held that the transaction was a bogus one. I do not know exactly what that issue was intended to mean. Apparently, defendant No. 2 had always remained in possession of the property, and he does not seem to have been very skilfully advised. I should have thought that his simplest course was to exercise his power of revocation under the second document. But he seems for some reason or other to have preferred to say that the whole transaction was what is called a bogus one. When the matter came on before the lower appellate Court, the issues raised were, first, whether as contended by defendants Nos. 1, 2 and 3 the gift was not intended to be operative and was a sham transaction, and, secondly, whether there was an acceptance of the gift by the donees. The learned Assistant Judge held that the gift was intended to be operative, that it was not a sham transaction, and that the deed of gift had been accepted. I accept the learned Judge's finding that the transaction was not intended to be a sham one and that the deed of gift was accepted. But the learned Assistant Judge held that the second document of May 10, 1916, could not be looked at in evidence, and, therefore, the plaintiff was entitled to her half share of the property. That involves a somewhat startling proposition, viz., that if property is conveyed to a trustee by a registered deed and on the same day the trustee executes a declaration of trust saying how he will deal with the property, and that declaration of trust is not registered, the trustee may ignore it and claim the property as his own, that is to say, he may perpetrate a fraud That is a proposition which nobody, trained in the principles of equity, is likely willingly to accept. Mr. Joshi on behalf of the respondents argued that if the so-called document of May 10, 1916, that is the declaration of trust, is a trust, then it is void because it was not registered under Section 5 of the Indian Trusts Act, But that section contains a provision that its terms do not apply where they would operate so as to effectuate a fraud. That provision seems to be based on the English rule, since it has been held by the English Courts that, although the Statute of Frauds in England requires a trust to be in writing, nevertheless, since it is a fraud for a trustee to deny a trust binding on him, and the Statute of Frauds cannot be allowed to be used as an instrument of fraud, therefore, verbal evidence of a trust may be given to defeat a fraud by the trustee (see the case of Rochefoucauld V/s. Boustead (1897) 1 Ch. 195, I think, therefore, that the Indian Trusts Act raises no objection to my looking at this document. But than it is said that the document is void under the Indian Registration Act, Section 17. Section 17(1)(a) provides that instruments of gift of immoveable property must be registered. Then comes Section 17(1)(6) which is the material section under which it is said that this document comes. That section provides for the compulsory registration of non-testamentary instruments which purport, or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of Rs. 100 and upwards to or in immoveable property. Now, I think this declaration of trust does declare, limit, and in the last paragraph, extinguish a right, title or interest to an immoveable property, but I see no evidence that this right, title or interest is of the value of Rs. 100 or upwards. There is no evidence of value at all. I am told that the property is worth about Rs. 2,000, but inasmuch as by this declaration of trust the settlor could at any moment have brought the whole trust to an end and required the property to be handed back, I think in all probability the market value of the property in respect of which the right, title or interest was declared by this declaration of trust was considerably less than Rs. 100 in value. That being so, I think that the document did not require registration and that I can, therefore, look at it.