A. Suhasini Vs. Controller of Estate Duty, Andhra Pradesh - Court Judgment

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direct taxation - disposition of property - sections 2 (15), 9 and 27 of estate duty act, 1953 - whether there was disposition of property within meaning of sections 9 and 27 of estate duty act to extent of rs. 24112 which could be included in principal value of estate - high court observed that parties have to divide both assets and liabilities equally - an unequal partition amounts to disposition and to gift within meaning of section 9 of and explanation 2 to section 2 (15) - there can be no partition without an understanding or an agreement between concerned parties - if division of properties was under or in pursuance of an agreement giving up debts must also be absorb to same understanding - held, there was disposition of property within said sections. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - he was well entitled to claim that his debt should come out of the estate, that similarly the debt due to his brother should also come out of the estate and that only then the balance will be divided equally. the tribunal has clearly found that this relinquishment was effected by the brothers at the time of partition.jeevan reddy, j.1. four questions are referred to us under s. 64(1) of he e.d. act, namely : '1. whether, on the facts and in the circumstance of the case, there was a disposition of the property within the meaning of secs. 9 and 27 of the estate duty act, to the extent of rs. 24,112 which could be include in the principal value of the estate 2. whether, on the facts and in the circumstances of the case, the maintenance and educational expenses for the unmarried daughters are deductible expenses from the total value of the estate for the purpose of levying estate duty 3. whether, on the facts and in the circumstances of the case, the maintenance expense of the widow of the deceased is not deductible from the principle value of the estate of the deceased for duty purposes 4. whether, on the facts and in the circumstances of the case, the estate duty payable on the estate of the deceased is to deductible from the principle value of the estate of the purpose of levying estate duty ?' 2. of the four questions, questions 2, 3 and 4 are concluded against the accountable person by the decision of this court in ced v. smt. p. leelavathamma : [1978]112itr739(ap) as has been fairly stated by the counsel for the accountable person. the learned counsel, however, stated that this court has granted leave to appeal to the supreme court against the aforesaid decision and that the matter is now pending in the supreme court. he, therefore, requested that we should also grant leave to appeal to the supreme court in so far as those three questions are concerned. it is, therefore, not necessary for us to refer to or deal with the said three questions. we shall, therefore, confine ourselves to question no. 1. 3. the deceased, a. raghurami reddy, constituted a coparcenary along with his father and brother. the father died on june 8, 1959, leaving behind him his widow, two sons, including the deceased, a. raghurami reddy, and two daughters. after the death of the father, the widow and the two daughters executed a relinquishment deed with respect to the share to which they were entitled under the hindu succession act in favour of the two sons. on december 2, 1963, the two brothers divided their properties among themselves. 4. during his lifetime the father had borrowed a sum of rs. 75,196 from the deceased and as sum of rs. 26,972 from the other son, malla reddy. while partitioning the properties among themselves on december 2, 1963, the two brother relinquished their respective debts due from the estate to them and divided the properties in equal shares. the result was that the deceased relinquished a large amount due to him from the estate than his brother. the deceased died on november 11, 1964, i.e., within two years of the partition. 5. the asst. controller was of the opinion that half the difference between the amount relinquished by the deceased and the amount relinquished by his brother has to be included in the principal value of the deceased's estate under ss. 2(15) and 27 read with s. 9 of the e.d. act. he was of the opinion that inasmuch as the relinquishment occurred within two years of the death, it must be treated as a gift. on appeal, the appellate controller agreed with the asst. control and dismissed the appeal. the accountable person appealed to the tribunal. the tribunal too agreed with the stand taken by the department and held that the relinquishment of his larger debt due to him from the estate by the deceased, at the time of partition, amounts to a disposition within the meaning of expln. 2 to s. 2(15), and is liable to be treated as a gift as contemplated by s. 9. the tribunal, however, held that s. 27 has no application to the facts of the case. 6. sri s. r. ashok, the learned counsel for the accountable person, contend before us that what had happened in this case was that the two brothers voluntarily gave up the debts due to them from the joint family and thereafter divided the properties. he submitted that the tribunal has not recorded any finding to the effect that there was an understanding or an agreement between the two brothers whereunder they had relinquished the debts due to them so as to attract s. 9. according to the learn counsel, to attract s. 9 what is necessary is that the transaction must be of such a nature as to constitute 'an immediate gift inter vivos'. he contend that inasmuch as there are no two parties to the relinquishment here but that each brother voluntarily and unilaterally gave up the debts due to him, s. 9 is not attracted. the counsel also contended that there is no finding by the tribunal that it is a case of unequal partition. 7. for a proper appreciation of the contentions of the learned counsel, it is necessary to notice the finding record by the tribunal which are set out in the statement of case. 8. according to the statement of the case, at the time of his death, the father owed the aforesaid two sums to his two sons. the two sons, after the death of the father, divided all the assets of the father equally between them. it is further found that 'while partitioning the father's estate, the two brothers relinquished their respective debts due from the estate and divided the assets in equal shares. thus the deceased had relinquished a larger amount due from the father's estate than that due to his brother'. 9. it is on the above finding that we have to determine the true nature of the transaction and to determine what actually happened on the date of the partition, namely, on december 2, 1963. 10. in a partition, the parties have to divide both the assets and liabilities equally. an unequal partition amounts to a disposition and to a gift within the meaning of s. 9 of and explain. 2 to clause (15) of s. 2 of the act, as held by the supreme court in ced. v. kantilal trikam lal : [1976]105itr92(sc) . when partition their father's estate the two brother relinquished their debts, one son in a sum of rs. 75,196 and the other in a sum of rs. 26,976 and this was obviously in pursuance of an understanding. but for an understanding among themselves, the deceased would not have given up a substantially higher debt due to him and thereby suffered a prejudice. he was well entitled to claim that his debt should come out of the estate, that similarly the debt due to his brother should also come out of the estate and that only then the balance will be divided equally. the fact that he did not do so must be ascribed to an understanding amount the brothers. in the circumstances, there is no scope for the theory that they unilaterally relinquished the debt due to each of them and that then they divided the properties among themselves. it is not possible to disassociate the relinquishment of debts from the partition. doing so would be unrealistic, and would indeed be contrary to the finding of the tribunal. it is evident that by such relinquishment there was an unequal partition between the brother, namely, the younger brother took a larger share; and to the extent of difference it has to be treated as a gift applying the decision of the supreme court aforesaid. 11. now with respect of the connection that the tribunal has not specifically recorded any finding regarding the existence of an understanding or an agreement between the brother, this is, in our opinion, too technical an argument. the tribunal has clearly found that this relinquishment was effected by the brothers at the time of partition. in other words, it was one single transaction. there can be no partition without an understanding or an agreement between the concerned parties. if the division of the properties was under or in pursuance of an agreement, the giving up of debts must also be ascribed to the same understanding. 12. sri. s. r. ashok relied upon an observation of the tribunal in para 8 of is judgment : 'here it is not a case of partition, but it is a case of relinquishment of one's right to certain debts....' true, such an observation was made while dealing with the decision in smt. cherukuri eswaramma v. ced : [1968]69itr109(ap) cited before it. but on account of this observation,the main finding of the tribunal cannot be ignored. the position would probably have been different, if there had been a reasonable interval between the relinquishment and the partition. in such a case, the learned counsel could legitimately invoke the principle of the madras, high court in a.n.k. rajamani ammal v. ced : [1972]84itr790(mad) , but such an attempt in the present circumstances, in our opinion, cannot be entertained. 13. for the above reasons, we answer question no. 1 referred to us in the affirmative, that is, in favour of the department and against the accountable person. question no. 2 is answered following the principle of the decision of this court in ced v. smt. p. leelavathamma : [1978]112itr739(ap) in the negative, that is to say, that the maintains and educational expenses for the unmarried daughters are not deductible expenses. similarly question no. 3 is also answered in the negative, that is, against the assessee following the same decision and so also question no. 4 no costs. 14. the learned counsel for the accountable person makes an oral request for the grant of leave to appeal to the supreme court in so far as questions nos. 2, 3 and 4 are concerned. since we have followed the decision of this court against which this court has granted lease to appeal to the supreme court, we too certify that these three questions constitute a fit case for appeal to the supreme court within the meaning of s. 65(1) of the e.d. act. a certificate shall accordingly issue.