ivil Appeal No 526 NT of 1979
From the Judgment dated 16121976 of the Kerala High Court in ITR No 101 of 1974
Dr V Gauri Shankar section Rajappa and Ms A Subhashini for the Appellant
Santosh N Hegde EMS Anam and KL Mehta for the Respondents
The Judgment of the Court was delivered by K JAGANNATHA SHETTY J
This appeal by special leave is against the decision of the High Court of Kerala in Income Tax Reference No 1011974 and it raises an important issue concerning the requirements of a gift made in contemplation of death within the meaning of Section 51xi of Gift Tax Act 1958 The Act 
That reference was made under Section 261 of the Gift Tax Act 1958 by the Income Tax Appellate Tribunal Cochin Bench
The Tribunal referred to the High Court two questions for its opinion out of which we are concerned only with the first question which reads Whether on the facts and circumstances of the case the 850 Tribunal was right in holding that the gift of movables valued at Rs67578 is not a gift made in contemplation of death within the meaning of section 51xi of  The facts of the case as found by the Tribunal are simple and not unusual
Abdul Karim Mohammed a businessman in Cochin executed a document styled as settlement will gifting certain movables to the assessee respondent inthe shape of business assets valued by the Gift Tax Officer at Rs67578
The document was executed on 4 April 1964 and at the time of execution the donor was seriously ill
He died of the illness after about six weeks
In gift tax assessment proceedings the assessee claimed exemption for this gift under section 51xi of the Act which provides that a gift shall not be charged under the in respect of a gift made by any person in contemplation of death
The Gift Tax Officer rejected the claim of the assessee and brought the said amount to tax
But on appeal the Appellate Assistant Commissioner held to the contrary
He allowed the exemption sought for on the ground that the gift was in contemplation of death
He has relied upon the circumstances under which the gift was made and the events followed thereafter to reach his conclusion
He has described the facts and circumstances as follows Now I agree with Sri Karunakaran that the absence of any reference in the deed of settlement to the illness from which the donor was suffering does not lead to the conclusion that there was no illness or that the donor was nor apprehensive of death resulting from the same
There is ample evidence to show that he was seriously ill at the time when he made the gift
He was aged about 72 at the time and he was also suffering from paralysis diabetes hernia etc
In fact in view of the seriousness of the condition he could not proceed to the Sub Registrar s office for registration of the document on the other hand the sub registrar ws brought to his residence for the purpose of effecting the registration
In an affidavit filed by him before the Gift Tax Officer on the 3rd August 1969 the sub registrar has affirmed that at the time of execution of the document the settler was in sick bed and was unable to move out of the same
He has also stated that the settler as well as his children showed anxiety and haste in the matter of registration on account of the serious nature of the illness
At that time according to the sub registrar the settler was in his proper sense but soon after the execution of the deed further complications set in and his power of speech and movements became impaired
Dr VB Mohammed who was treating him has certified that 851 on 4th June 1964 patient was unable to recognise the surroundings properly and that his mental condition was impaired to a great degree
On 9th June 1964 ie within about six weeks from the date of the settlement he died
In these circumstances I am satisfied that the donor an aged gentleman who seriously ill at the time of the settlement entertained no hope of recovery and that it was in such a state of mind that he made the settlement
Hence the gifts must be taken to have been made in contemplation of death
 The Gift Tax Officer appealed to the Tribunal against the decision of the Appellate Assistant Commissioner
The Tribunal has affirmed the finding of the Appellate Assistant Commissioner that the donor at the time of gift was ill and expected to die shortly of his illness
The Tribunal observed But we are satisfied that the Appellate Assistant Commissioner was on the facts and circumstances of the case right in his conclusion that the donor an aged gentleman who was seriously ill at the time of the settlement entertained no hope of recovery and that it was in such a state of mind that he made the settlement
The materials referred relied on and discussed by the Appellate Assistant Commissioner in the appellate order are sufficient enough to lead to a reasonable conclusion that the donor was at the time of execution of the document ill and that he expected to die shortly of his illness The Tribunal however did not agree with the exemption allowed to the assessee
It has stated that the finding recorded by the Assistant Commissioner that the donor was ill at the time of gift and he died thereafter out of the illness alone is not sufficient to hold that the gift was made in contemplation of gift death
In order to satisfy the requirements of gift in contemplation of death there must be two other conditions to be satisfied i There must be delivery of possession of the gifted movables to the donee ii that a gift is entitled to take effect only in the event of the donor s death and that if the donor recovers from the illness the property should revert back
On the first condition the Tribunal found on facts that there was delivery of possession of the gifted movables
On the second condition the Tribunal observed that the gift was unconditional and it was in nature of settlement deed pure and simple
It was executed to settle absolutely forever the property of the donor without any condition
It is just like any other settlement executed by a person without the contemplation of death
It has not been expressly specified or impliedly present in the deed that the gift must revert back in the event of the donor recovering from illness
The gifted property has to be kept as a gift in case the donor shall die of his illness has also not been satisfied in the case
With these findings the Tribunal allowed the appeal of the Gift Tax Officer
852 Thereafter at the instance of the assessee the question set out earlier was referred to the High Court for its opinion
The High Court has answered the question in the negative and in favour of the assessee
The High Court expressed the view that it is not necessary that there must be recital in the deed stating that the property would revert to the donor in the event of his recovery from the illness or the donor surviving the donee
Such a condition could be inferred from the attending circumstances of the gift
The High Court has referred to the affidavits filed by the sub registrar who registered the document and the Doctor who treated the donor to come to the conclusion that the donor was seriously ill at the time of execution of the deed and expected to die shortly of that illness
The factum of delivery of the gifted assets to the donee at a time when the donor was seriously sick and the donor s death shortly thereafter were also relied upon
It was then stated that in as much as the donor was actually sick at the time of execution of the deed and died of the same illness without recovery after a short period the gift in question was made in contemplation of death and therefore entitled to exemption from tax under Section 51xi of the Act
The legality of the view expressed by the High Court is under challenge in this appeal
First we may refer to the relevant statutory provisions bearing on the question
Section 3 of the Act is the charging section and it provides that in respect of gifts there shall be charged tax referred to as the gift tax at the rate specified in the schedule
Section 5 provides exemption in respect of certain gifts
Section 5 sub section 1xi provides that gift tax shall not be charged under the Act in respect of gifts made by any person in contemplation of death
Explanation d to sub section 2 of Section 5 states that gifts made in contemplation of death has the same meaning as in Section 191 of the 
Section 191 of the deals with the requirements of gifts made in contemplation of death
It reads as follows 191
Property transferable by gift made in contemplation of death
1 A man may dispose by gift made in contemplation of death of any movable property which he could dispose of by will
2 A gift said to be made in contemplation of death where a man who is ill and expects to die shortly his illness 853 delivers to another the possession of any movable property to keep as a gift in case the donor shall die of that illness
3 Such a gift may be resumed by the giver and shall not take effect if he recovers from the illness during which it was made nor if e survives the person to whom it was made
The requirements of a gift in contemplation of death as laid down by Section 191 of the are i the gift must be of movable property ii it must be made in contemplation of death iii the donor must be ill and he expects to die shortly of the illness iv possession of the property should be delivered to the donee and v the gift does not take effect if the donor recovers from the illness or the donee predeceases the donor
There is nothing new in the requirements provided under Section 191 of the Succession Act
They are similar to the constituent elements of a valid donatio mortis causa
The essential conditions of a donatio mortis causa may be summarised thus For an effectual donatio mortis causa three things must combine firs the gift or donation must have been made in contemplation though not necessarily in expectation of death secondly there must have been delivery to the donee of the subject matter of the gift and thirdly
the gift must be made under such circumstances as shew that the thing is to revert to the donor in case he should recover
This last requirement is sometimes put some what differently and it is said that the gift must be made under circumstances shewing that it is to take effect only if the death of donor follows it is not necessary to say which way of putting it is the better See Cain vs Moon at 286
Now all the conditions of a valid gift in contemplation of death except perhaps the last condition prescribed under section 191 of the are found present in this case by the fact finding authorities
The gift was made when the donor was seriously ill and apprehending his death
The donor died within six weeks after the execution of the deed
The possession of the property gifted has been delivered to the donee before the death
But it is said that there is nothing to show in the document expressly or impliedly that the gift was made under such circumstances that the thing was to revert to the donor in case he should recover
Dr Gauri Shankar learned counsel for the Revenue contends that the gift in contemplation of death should be conditional that is on the term that if the donor would not 854 die he should be entitled to remain complete dominion of the property the subject matter of the gift
There should be indications in the document to that effect without which counsel states that the gift becomes inter vivos and absolute
It seems to us that the recitals in the deed of gift are not conclusive to determine the nature and validity of the gift
The party may produce evidence aliunde to prove that the donor gifted the property when he was seriously ill and contemplating his death with no hope of recovery
These factors in conjunction with the factum of death of the donor may be sufficient to infer that the gift was made in contemplation of death
It is implicit in such circumstances that the donee becomes the owner of the gifted property only if the donor dies of the illness and if the donor recovers from the illness the recovery itself operates as a revocation of the gift
It is not necessary to state that in the gift deed that the donee becomes the owner of the property only upon the death of the donor
Nor it is necessary to specify that the gift is liable to be revoked upon the donor s recovery from the illness
The law acknowledges these conditions from the circumstances under which the gift is made
Reference may be made to the following passage from Halsbury s Laws of England 4th ed
20 p 41 para 67 There is an implied condition that the gift is to be retained only in the event of death even though the donor does not expressly say so
The death may take place some time afterwards or the donor may actually die from some other illness but if the donor recovers from illness during which the gift is made the donee has no title and can only hold what was delivered to him in trust for the donor Jerman on Wills 8th ed
1 p 46 47 also lends light on this aspect The conditional nature of the gift need not be expressed It is implied in the absence of evidence to the contrary
And even if the transaction is such as would in the case of a gift inter vivos confers a complete legal title if the circumstances authorise the supposition that the gift was made in contemplation of death mortis causa is presumed
It is immaterial that the donor in that dies from some disorder not contemplated by him at the time he made the gift
 Similar is the statement of law in Williams on Executors and 855 Administrators 14 ed
p 315 542
Conditional on death The gift must be conditioned to take effect only on the death of the donor
But it is not essential that the donor should expressly attach this condition to the gift for if a gift is made during the donor s last illness and in contemplation of death the law infers the condition that the donee is to hold the donation only in case the donor dies
 The principles in the Corpus Juris Secundum vol 38 p 782 are not quite different 
A gift causa mortis differs from a gift inter vivos in that it is made in view of expected or impending death as appears infra  7578
The vital distinction between a gift inter vivos and a gift causa mortis is that the former is irrevocable while the latter may be revoked at any time before the donor s death and may be defeated by the recovery or survival of the donor
More fully a gift causa mortis is liable to revocation by the donor and does not pass an irrevocable title until the death of the donor while a gift inter vivos vests an irrevocable title on delivery in the case of a gift inter vivos the title is not only transferred and vested in the donee at once but the gift is immediately completed and is absolute and irrevocable while in the case of a gift causa mortis the transfer is subject to be defeated by the happening of any one of the conditions implied by the law
 It is further stated at p 917 para 110 A gift causa mortis is revoked by the recovery of the donor from the particular illness or his survival of the peril which existed at the time of the gift and in contemplation of which the gift was made
The recovery of the donor from the particular illness or his survival of the peril which existed at the time of the gift and in contemplation of which the gift was made will of itself operate as a revocation of the gift
 856 In the light of these principles and in view of the findings recorded by the Tribunal about the serious sickness of the donor and his state of mind at the time of making the gift in question it can be reasonably concluded that the gift was not absolute and irrevocable
On the contrary it will be legitimate to infer that the gift was in contemplation of death
Any other view in this case would be inappropriate
No account in this regard would be complete unless it is held that marz ul maut gift with which we are concerned is also entitled to exemption from gift tax under Section 51xi of the Act
Counsel for the Revenue argues that the exemption provided under Section 51xi of the Act is not available to the assessee since Section 191 of the is not applicable to marz ul maut gift
We do not find much substance in this submission
The exemption to gift in contemplation of death is provided under Section 51xi of the Act and not under Section 191 of the 
Section 191 furnishes only the meaning or requirements of gift in contemplation of death
If a gift in contemplation of death is recognised by the personal law of parties satisfying the conditions contemplated under Section 191 of the  it cannot be denied exemption under Section 51xi of the act even assuming that Section 191 as such will not be applicable to the parties
Under Mohammedan Law gift made during marz ul maut death bed illness is subject to very strict scrutiny for its validity
Marz ul maut is a malady which induces an apprehension of death in the person suffering from it and which eventually results in his death
There are three tests laid down to determine whether illness is to be regarded as marz ul maut
They are 1 Proximate danger of death so that there is a preponderance of Khauf or apprehension that at the given time death must be more probable than life
2 There must be some degree of subjective apprehension of death in the mind of the sick person
3 There must be external indicia chief among which would be the inability to attend to ordinary avocations
See Rashid Karmalli and Anr
vs sherbanoo The gift made during marz ul maut is subject to all other conditions necessary for the validity of a hiba or gift including delivery of possession by the donor to the donee
See Mulla s Mohammedan Law pp
109 111 Section 135  136
Syed Ameer Ali in his book on Mohammedan Law throws some more light on the principles of gift of the sick 
It is stated In the chapter in the Fatawai Alamgiri dealing with the gift of the sick the principles are set forth at some length
In the first place it is stated from the Asal that neither a gift nor a sadakah by a mariz a person suffering from 857 marz ul maut of which the definition is given later on is effective without possession and if possession is taken it is valid inrespect of a third
If the donor were to die before delivery taslim the whole disposition would be invalid
It is therefore necessary to understand that a gift by a mariz is a contract and not a wasiat and the right of disposition is restricted to a third on account of the right of the heirs which attaches to the property of the mariz
And as it is an act of bounty it is effective so far only as the law allows and that is a third
And being a contractual disposition it is subject to the conditions relating to gifts among them the taking of possession by the donee before the death f the donor Vol
14th ed
1985 p 59 60
From these principles of Mohammedan Law it will be clear that the gift made in marz ul maut could be regarded as gift made in contemplation of death since it has all the requisites prescribed under Section 191 of the 
The only limitation under Mohammedan Law is that the disposition is restricted to a third on account of the right of the heirs
Marz ul maut gift cannot therefore take effect beyond a third of the estate of the donor after payment of funeral expenses and debt unless heirs give their consent after the death of the donor to the excess taking effect
Whether there is any such consent given in this case by his heirs is the subject matter of enquiry to be made by the Tribunal
It may be stated that the second question refered to the High Court relates to the validity of the gift beyond a third of the estates of the donor
On that question the High Court has not expressed any view and it has directed the Tribunal to consider that issue afresh
We therefore refrain from expressing any views on that matter
From the foregoing discussion the view taken by the High Court is correct and it does not call for interference
We accordingly dismiss the appeal with costs
NPV Appeal dismissed


Summary:
The appellant took on lease some agricultural lands from one Viswas Rao and by operation of Section 321 of the Bombay Tenancy and Agricultural Lands Act 67 of 1948 which was applicable to the lease he became a deemed purchaser from tillers  day ie 141957
Since the landlord was insane the right to purchase was statutorily deferred under section 32 F till date of its cessation or one year after death
Pursuant to the notification issued under Section 881b of the Act certain lands including those of the appellant s lease hold lands were reserved for industrial purpose thereby making sections 1 to 87 of the Act inapplicable to the exempted area
During the subsistence of disability of the landlord his son Vasant Rao sold the land to the respondent under registered sale deed
Vishwas Rao died in September 1965
The appellant became entitled to purchase the land on and from August 19 1966
He therefore filed an application before Mamlatdar to fix the price
He fixed on enquiry at Rs49565 P which was paid by the appellant
In the enquiry the respondent contended that he purchased the property from Vasantrao son of the landlord and by operation of the second proviso to Section 881b the lands stood exempted from the operation of Section 1 to 87 of the Act
So the Mamlatdar had no jurisdiction to decide the price of the land
The appellant s contention was that Vasantrao had no right to sell the lands during the life time of his father the Karta of the Hindu Joint Family
The sale was invalid and did not bind him
He had acquired statutory right of deemed purchaser  and its exemption under section 881b did not divest his statutory right
The Mamlatdar accepted the appellant s contention and allowed the petition
On appeal to the Collector and revision to the Revenue Tribunal the decision of Mamlatdar was reversed
The Division Bench of the High Court dismissed the writ petition
Hence this appeal by the appellant after obtaining special leave
On the question whether the operation of the second proviso to Section 881b of the tenancy Act 1948 has retrospective effect depriving the appellant of the statutory right 803 Allowing the appeal this Court HELD Section 88 of the Act empowers the government to exempt certain other lands from the purview of Sections 1 to 87 of the Act
The State Governments exercised their power from time to time under Section 881b and issued notification and punished in the official Gazette specifying certain areas as being reserved for non agricultural or industrial development ie urban development
806C D It any land in the newly added area has been transferred or acquired between the date of the notification issued under first proviso and October 9 1964 such transfer or acquisition of land shall have the effect as if it was made in an area to which the main part of the proviso and Section 881b would apply
The necessary consequence would be that the provisions of Sections 1 to 87 shall not apply and shall be deemed never to have applied to such added area
It is implicit that such transfer or acquisition made to bring within the net of second proviso must be valid and bona fide one and not colourable fraudulent fictitious or nominal
809G 810B In the instant case since Vasantrao did not obtain any order from the competent court under the Lunacy Act to have him appointed as Manager of the joint family to alienate the property the sale is per se illegal The sale therefore appears to be to defeat the statutory right of the appellant
The rigour of the second proviso to Section 881b is thus inapplicable
Thereby the right and interest as deemed purchaser acquired by the appellant has not been affected by subsequent notification issued under section 881b
811F G Sukharam  Bapusaheb Narayan Sanas  Anr
vs Manikchand Motichand Shah  Anr 196 2 SCR 59 Mohanlal Chunilal Kothari vs Tribhovan Haribhai Tamboli   Sidram Narsappa Kamble vs Sholapur Borough Municipality  Anr   Parvati  Ors vs Fatehsinhrao Pratapsinghrao Gaekwad   Navinchandra Ramanlal vs Kalidas Bhudarbai  Anr   PK Gobindan Nair  Ors
vs P Narayanan Nair  Ors Indian Cases 743 and A Ramacharlu vs Archakan Ananthacharlu  Anr AIR 1955 AP 261 referred to